Dog Up! Franks is looking at a new sausage system with an installed cost of $600,600. This cost will be depreciated straight-line to zero over the project's 6-year life, at the end of which the sausage system can be scrapped for $92,400. The sausage system will save the firm $184,800 per year in pretax operating costs, and the system requires an initial investment in net working capital of $43,120. If the tax rate is 23 percent and the discount rate is 15 percent, what is the NPV of this project?

Dog Up! Franks is looking at a new sausage system with an installed cost of $600,600. This cost will be depreciated straight-line to zero over the project's 6-year life, at the end of which the sausage system can be scrapped for $92,400. The sausage system will save the firm $184,800 per year in pretax operating costs, and the system requires an initial investment in net working capital of $43,120. If the tax rate is 23 percent and the discount rate is 15 percent, what is the NPV of this project?

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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