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"A firm is considering purchasing a computer system. The following data has been collected. - Cost of...

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Finance

"A firm is considering purchasing a computer system. Thefollowing data has been collected.
- Cost of the system: $180,000
- Project life: 6 years
- Salvage value at the end of year 6: $14,000
- Depreciation method: five-year MACRS
- Tax rate: 21%
- Annual revenue from project: $148,000
- Annual expenses (not including depreciation): $93,000
The firm will borrow the entire $180,000 at 6.4% interest to berepaid in 2 annual payments.
The firm's MARR is 15%. Determine the IRR for the computer system.Enter your answer as a percentage rounded to the nearest tenth of apercent."

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4.4 Ratings (934 Votes)
cost of system180000Annual depreciationyearcost of machineMACRS rateAnnual    See Answer
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Transcribed Image Text

"A firm is considering purchasing a computer system. Thefollowing data has been collected.- Cost of the system: $180,000- Project life: 6 years- Salvage value at the end of year 6: $14,000- Depreciation method: five-year MACRS- Tax rate: 21%- Annual revenue from project: $148,000- Annual expenses (not including depreciation): $93,000The firm will borrow the entire $180,000 at 6.4% interest to berepaid in 2 annual payments.The firm's MARR is 15%. Determine the IRR for the computer system.Enter your answer as a percentage rounded to the nearest tenth of apercent."

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