Dog Up! Franks is looking at a new sausage system with an installed cost of $897,000....

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Dog Up! Franks is looking at a new sausage system with aninstalled cost of $897,000. This cost will be depreciatedstraight-line to zero over the project's 9-year life, at the end ofwhich the sausage system can be scrapped for $138,000. The sausagesystem will save the firm $276,000 per year in pretax operatingcosts, and the system requires an initial investment in net workingcapital of $64,400. Required: If the tax rate is 33 percent and thediscount rate is 13 percent, what is the NPV of this project?

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Initial Investment for the Project Initial Investment for the Project Cost of the asset Working capital needed 897000 64400 961400 Annual Operating Cash Flow OCF Annual Operating Cash Flow OCF Pretax Savings1 Tax Rate Depreciation x See Answer

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Dog Up! Franks is looking at a new sausage system with aninstalled cost of $897,000. This cost will be depreciatedstraight-line to zero over the project's 9-year life, at the end ofwhich the sausage system can be scrapped for $138,000. The sausagesystem will save the firm $276,000 per year in pretax operatingcosts, and the system requires an initial investment in net workingcapital of $64,400. Required: If the tax rate is 33 percent and thediscount rate is 13 percent, what is the NPV of this project?