Dog Up! Franks is looking at a new sausage system with an installed cost of $470,000. 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 $63,000. The sausage system will save the firm $144,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $27,500. If the tax rate is 23 percent and the discount rate is 11 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.)
Dog Up! Franks is looking at a new sausage system with an installed cost of $470,000. 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 $63,000. The sausage system will save the firm $144,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $27,500. If the tax rate is 23 percent and the discount rate is 11 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.)
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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am. 125.
Transcribed Image Text:Dog Up! Franks is looking at a new sausage system with an installed cost of $470,000.
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 $63,000. The sausage system will
save the firm $144,000 per year in pretax operating costs, and the system requires an
initial investment in net working capital of $27,500. If the tax rate is 23 percent and the
discount rate is 11 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.)
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