Dog Up! Franks is looking at a new sausage system with an installed cost of $385,000. This cost will be depreciated stra
Posted: Thu May 19, 2022 6:59 am
Dog Up! Franks is looking at a new sausage system with an
installed cost of $385,000. 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 $60,000. The
sausage system will save the firm $135,000 per year in pretax
operating costs, and the system requires an initial investment in
net working capital of $35,000. If the tax rate is 21 percent
and the discount rate is 10 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.)
How to find NPV? Using the financial calculator
installed cost of $385,000. 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 $60,000. The
sausage system will save the firm $135,000 per year in pretax
operating costs, and the system requires an initial investment in
net working capital of $35,000. If the tax rate is 21 percent
and the discount rate is 10 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.)
How to find NPV? Using the financial calculator