Dog Up! Franks is looking at a new sausage system with an installed cost of $858,000. This cost will be depreciated straight-line to zero over the project's 10-year life, at the end of which the sausage system can be scrapped for $132,000. The sausage system will save the firm $264,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $61,600.
Required: |
If the tax rate is 31 percent and the discount rate is 15 percent, what is the NPV of this project? |
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