Fox Hollow Franks is looking at a new system with an installed cost of $540,000. This equipment is depreciated at a rate of 20% per year (Class 8) over the project's five-year life, at the end of which the sausage system can be sold for $80,000. The sausage system will save the firm $170,000 per year in pre-tax operating costs, and the system requires an initial investment in net working capital of $29,000. If the tax rate is 34% and the discount rate is 10 %, what is the NPV of this project? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $

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
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Fox Hollow Franks is looking at a new system with an installed cost of $540,000. This equipment is depreciated at a rate of 20% per
year (Class 8) over the project's five-year life, at the end of which the sausage system can be sold for $80,000. The sausage system
will save the firm $170,000 per year in pre-tax operating costs, and the system requires an initial investment in net working capital of
$29,000. If the tax rate is 34% and the discount rate is 10%, what is the NPV of this project? (Do not round your intermediate
calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)
NPV
$
Transcribed Image Text:Fox Hollow Franks is looking at a new system with an installed cost of $540,000. This equipment is depreciated at a rate of 20% per year (Class 8) over the project's five-year life, at the end of which the sausage system can be sold for $80,000. The sausage system will save the firm $170,000 per year in pre-tax operating costs, and the system requires an initial investment in net working capital of $29,000. If the tax rate is 34% and the discount rate is 10%, what is the NPV of this project? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $
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