Dog Up! Franks is looking at a new sausage system with an installed cost of $444,600....

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Dog Up! Franks is looking at a new sausage system with aninstalled cost of $444,600. This cost will bedepreciated straight-line to zero over the project's 3-yearlife, at the end of which the sausage system can bescrapped for $68,400. The sausage system will savethe firm $136,800 per year in pretax operatingcosts, and the system requires an initial investment in net workingcapital of $31,920. If the tax rate is 31percent and the discount rate is 15percent, the NPV of this projectis..........?

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3.6 Ratings (625 Votes)
Initial Investment 444600 Useful Life 3 years Annual Depreciation Initial Investment Useful Life Annual Depreciation 444600 3 Annual Depreciation 148200 Initial Investment in    See Answer
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Dog Up! Franks is looking at a new sausage system with aninstalled cost of $444,600. This cost will bedepreciated straight-line to zero over the project's 3-yearlife, at the end of which the sausage system can bescrapped for $68,400. The sausage system will savethe firm $136,800 per year in pretax operatingcosts, and the system requires an initial investment in net workingcapital of $31,920. If the tax rate is 31percent and the discount rate is 15percent, the NPV of this projectis..........?

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