Dog Up! Franks is looking at a new sausage system with an installed cost of $750,000. This cost will be depreciated straight-line to- zero over the project's 7-year life, at the end of which the sausage system can be scrapped for $104,000. The sausage system will save the firm $221,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $73,000. What is the aftertax salvage value of the equipment? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. Aftertax salvage value OCF $ What is the annual operating cash flow? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. 79,040 NPV of the tax rate is 24 percent and the discount rate is 11 percent, what is the NPV of this project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Ee 326.

Dog Up! Franks is looking at a new sausage system with an installed cost of $750,000. This cost will be depreciated straight-line to
zero over the project's 7-year life, at the end of which the sausage system can be scrapped for $104,000. The sausage system will
save the firm $221,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of
$73,000.
What is the aftertax salvage value of the equipment?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
Aftertax salvage value
OCF
$
What is the annual operating cash flow?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
79,040
NPV
If the tax rate is 24 percent and the discount rate is 11 percent, what is the NPV of this project?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Transcribed Image Text:Dog Up! Franks is looking at a new sausage system with an installed cost of $750,000. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the sausage system can be scrapped for $104,000. The sausage system will save the firm $221,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $73,000. What is the aftertax salvage value of the equipment? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. Aftertax salvage value OCF $ What is the annual operating cash flow? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. 79,040 NPV If the tax rate is 24 percent and the discount rate is 11 percent, what is the NPV of this project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Capital Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education