Dog Up! Franks is looking at a new sausage systemwith an installed cost of $335,400. This cost will bedepreciated straight-line to zero over the project's5-year life, at the end of which the sausage systemcan be scrapped for $51,600. The sausage systemwill save the firm $103, 200 per year in pretaxoperating costs, and the system requires an initialinvestment in net working capital of $24,080. If thetax rate is 22 percent and the discount rate is 14percent, what is the NPV of this project?

To calculate the Net Present Value (NPV) of the project for Dog Up! Franks, follow these…

Answered: Dog Up! Franks is looking at a new…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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5 Dog Up! Franks is looking at a new sausage system with an installed cost of $904,800. This cost will be depreciated straight-line to zero over the project's 3-year life, at the end of which the sausage system can be scrapped for $139,200. The sausage system will save the firm $278,400 per year in pretax operating costs, and the system requires an initial investment in net working capital of $64,960. If the tax rate is 24 percent and the discount rate is 11 percent, what is the NPV of this project?
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Kolby's Korndogs is looking at a new sausage system with an installed cost of $735,000. The asset qualifies for 100 percent bonus depreciation and can be scrapped for $101,000 at the end of the project's 5-year life. The sausage system will save the firm $215,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $67,000. If the tax rate is 21 percent and the discount rate is 8 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV =
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Cori's Meats is looking at a new sausage system with an installed cost of $435,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $61,000. The sausage system will save the firm $255,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $20,000. If the tax rate is 24 percent and the discount rate is 9 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV
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