Project Evaluation Kolby's Korndogs is looking at a new sausage system with an installed cost of $740,000. This cost will be depreciated straight-line to zero over the project's seven-year life, at the end of which the sausage system can be scrapped for $102,000. The sausage system will save the firm $217,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $69,000. What is the aftertax salvage value of the equipment? What is the annual operating cash flow? If the tax rate is 22 percent and the discount rate is 9 percent, what is the NPV of this project? Output area: Annual depreciation charge Aftertax salvage value OCF NPV fx for credit consideration here
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