Dog Up! Franks is looking at a new sausage system with an installed cost of $741,000....

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Dog Up! Franks is looking at a new sausage system with aninstalled cost of $741,000. This cost will be depreciatedstraight-line to zero over the project's 10-year life, at the endof which the sausage system can be scrapped for $114,000. Thesausage system will save the firm $228,000 per year in pretaxoperating costs, and the system requires an initial investment innet working capital of $53,200.
Required: If the tax rate is 35 percent and the discount rate is8 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 741000 53200 794200 Annual Operating Cash Flow OCF Annual Operating Cash Flow OCF Pretax Savings1 Tax Rate Depreciation See Answer

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Dog Up! Franks is looking at a new sausage system with aninstalled cost of $741,000. This cost will be depreciatedstraight-line to zero over the project's 10-year life, at the endof which the sausage system can be scrapped for $114,000. Thesausage system will save the firm $228,000 per year in pretaxoperating costs, and the system requires an initial investment innet working capital of $53,200.Required: If the tax rate is 35 percent and the discount rate is8 percent, what is the NPV of this project?