Dog Up! Franks is looking at a new sausage system with an installed cost of $495,000....

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Dog Up! Franks is looking at a new sausage system with aninstalled cost of $495,000. This cost will be depreciatedstraight-line to zero over the project’s five-year life, at the endof which the sausage system can be scrapped for $73,000. Thesausage system will save the firm $149,000 per year in pretaxoperating costs, and the system requires an initial investment innet working capital of $30,000.

If the tax rate is 23 percent and the discount rate is 11percent, what is the NPV of this project? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)

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4.1 Ratings (625 Votes)
Initial Investment 495000 Useful Life 5 years Annual Depreciation Initial Investment Useful Life Annual Depreciation 495000 5 Annual Depreciation 99000 Initial Investment in    See Answer
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Dog Up! Franks is looking at a new sausage system with aninstalled cost of $495,000. This cost will be depreciatedstraight-line to zero over the project’s five-year life, at the endof which the sausage system can be scrapped for $73,000. Thesausage system will save the firm $149,000 per year in pretaxoperating costs, and the system requires an initial investment innet working capital of $30,000.If the tax rate is 23 percent and the discount rate is 11percent, what is the NPV of this project? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)

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