Kolby's Korndogs is looking at a new sausage system with an installed cost of $670,000. The asset qualifies for 100 percent bonus depreciation and can be scrapped for $88,000 at the end of the project's 5-year life. The sausage system will save the firm $213,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $41,000. 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.) NPV

Kolby's Korndogs is looking at a new sausage system with an installed cost of $670,000. The asset qualifies for 100 percent bonus depreciation and can be scrapped for $88,000 at the end of the project's 5-year life. The sausage system will save the firm $213,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $41,000. 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.) NPV

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Question

Kolby's Korndogs is looking at a new sausage system with an installed cost of $670,000.
The asset qualifies for 100 percent bonus depreciation and can be scrapped for $88,000
at the end of the project's 5-year life. The sausage system will save the firm $213,000
per year in pretax operating costs, and the system requires an initial investment in net
working capital of $41,000. 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.)
NPV

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