Your firm is contemplating the purchase of a new $545,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $53,000 at the end of that time. You will be able to reduce working capital by $68,000 (this is a one-time reduction). The tax rate is 34 percent and the required return on the project is 14 percent.If the pretax cost savings are $217,000 per year, what is the NPV of this project?
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