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Project Evaluation Kolby’s Korndogs is looking at a new sausage system with an installed cost of...

Project Evaluation Kolby’s Korndogs is looking at a new sausage system

with an installed cost of $655,000. 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 $85,000. The sausage system will save the firm
$183,000 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 22 percent and
the discount rate is 8 percent, what is the NPV of this project?

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