Dog Up! Franks is looking at a new sausage system with an installed cost of $873,600. This cost will be depreciated straight-line to zero over the project's 8-year life, at the end of which the sausage system can be scrapped for $134,400. The sausage system will save the firm $268,800 per year in pretax operating costs, and the system requires an initial investment in net working capital of $62,720.
Required: If the tax rate is 30 percent and the discount rate is 16 percent, what is the NPV of this project
| Dog Up! Franks is looking at a new sausage system with an installed cost of $873,600. This cost will be depreciated straight-line to zero over the project's 8-year life, at the end of which the sausage system can be scrapped for $134,400. The sausage system will save the firm $268,800 per year in pretax operating costs, and the system requires an initial investment in net working capital of $62,720. |
| Required: |
| If the tax rate is 30 percent and the discount rate is 16 percent, what is the NPV of this project |
Related questions
| Dog Up! Franks is looking at a new sausage system with an installed cost of $470,000. This cost will be depreciated straight-line to zero over the projectâs five-year life, at the end of which the sausage system can be scrapped for $68,000. The sausage system will save the firm $220,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $27,000. If the tax rate is 34 percent and the discount rate is 10 percent, what is the NPV of this project? |
