Kappa Holdings is looking at a new system with an installed cost of $740,000. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the system can be salvaged for $102,000. The system will save the firm $217,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $69,000, which will be returned at the end of the project. If the tax rate is 22 percent and the discount rate is 9 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
Kappa Holdings is looking at a new system with an installed cost of $740,000. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the system can be salvaged for $102,000. The system will save the firm $217,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $69,000, which will be returned at the end of the project. If the tax rate is 22 percent and the discount rate is 9 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
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![**Project Evaluation**
Kappa Holdings is evaluating a new system with an installed cost of $740,000. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the system can be salvaged for $102,000. The system will save the firm $217,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $69,000, which will be returned at the end of the project.
Given the following conditions:
- Tax rate: 22%
- Discount rate: 9%
The task is to determine the Net Present Value (NPV) of this project.
**Note:** Do not round intermediate calculations and round your answer to two decimal places (e.g., 32.16).
![NPV Calculation Section](image/)
This section provides a space to input the calculated NPV.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fde74f136-44f2-4a02-80e8-fc7d1b4c57d8%2F6ea7959e-b1d6-480f-9644-290fab05154d%2Fe9rngpa_processed.png&w=3840&q=75)
Transcribed Image Text:**Project Evaluation**
Kappa Holdings is evaluating a new system with an installed cost of $740,000. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the system can be salvaged for $102,000. The system will save the firm $217,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $69,000, which will be returned at the end of the project.
Given the following conditions:
- Tax rate: 22%
- Discount rate: 9%
The task is to determine the Net Present Value (NPV) of this project.
**Note:** Do not round intermediate calculations and round your answer to two decimal places (e.g., 32.16).
![NPV Calculation Section](image/)
This section provides a space to input the calculated NPV.
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