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NPV

Dog Up! Franks is looking at a new sausage system with an installed cost of $465,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $61,000. The sausage system will save the firm $143,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $27,000. If the tax rate is 22 percent and the discount rate is 10 percent, what is the NPV of this project?

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answered by: Allen
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