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Dog Up! Franks is looking at a new sausage system with an installed cost of $647,400....

Dog Up! Franks is looking at a new sausage system with an installed cost of $647,400. This cost will be depreciated straight-line to zero over the project's 9-year life, at the end of which the sausage system can be scrapped for $99,600. The sausage system will save the firm $199,200 per year in pretax operating costs, and the system requires an initial investment in net working capital of $46,480.

  

Required:
If the tax rate is 34 percent and the discount rate is 10 percent, what is the NPV of this project?

Solutions

Expert Solution

Solution :

The NPV of this project = $ 251,711.28

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 7 months ago
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