Dog Up! Franks is looking at a new sausage system with an installed cost of $385,000 that will last for five years. This cost will be depreciated using 100 percent bonus depreciation in the first year. At the end of the project, the sausage system can be scrapped for $60,000. The sausage system will save the firm $135,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $35,000. If the tax rate is 21 percent and the discount rate is 10 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
Dog Up! Franks is looking at a new sausage system with an installed cost of $385,000 that will last for five years. This cost will be depreciated using 100 percent bonus depreciation in the first year. At the end of the project, the sausage system can be scrapped for $60,000. The sausage system will save the firm $135,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $35,000. If the tax rate is 21 percent and the discount rate is 10 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
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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