Question

In: Finance

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $685,000. The...

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $685,000. The asset qualifies for 100 percent bonus depreciation and can be scrapped for $91,000 at the end of the project’s 5-year life. The sausage system will save the firm $195,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $47,000. If the tax rate is 21 percent and the discount rate is 10 percent, what is the NPV of this project?

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -


Related Solutions

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $675,000. The...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $675,000. The asset qualifies for 100 percent bonus depreciation and can be scrapped for $89,000 at the end of the project’s 5-year life. The sausage system will save the firm $191,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $43,000. If the tax rate is 24 percent and the discount rate is 8 percent, what is...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $882,000. This...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $882,000. This cost will be depreciated straight-line to zero over the project’s seven-year life, at the end of which the sausage system can be scrapped for $97,000. The sausage system will save the firm $185,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $43,000. If the tax rate is 30 percent and the discount rate is...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $695,000. This...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $695,000. This cost will be depreciated straight-line to zero over the project’s 5-year life, at the end of which the sausage system can be scrapped for $93,000. The sausage system will save the firm $199,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $51,000. If the tax rate is 23 percent and the discount rate is...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $720,000. This...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $720,000. This cost will be depreciated straight-line to zero over the project’s 6-year life, at the end of which the sausage system can be scrapped for $98,000. The sausage system will save the firm $209,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $61,000. What is the aftertax salvage value of the equipment? (Do not round...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $680,000. This...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $680,000. This cost will be depreciated straight-line to zero over the project’s 5-year life, at the end of which the sausage system can be scrapped for $90,000. The sausage system will save the firm $193,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $45,000. If the tax rate is 25 percent and the discount rate is...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $514,000. This...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $514,000. This cost will be depreciated straight-line to zero over the project’s four-year life, at the end of which the sausage system can be scrapped for $102,000. The sausage system will save the firm $190,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $48,000. PLEASE SHOW WORK WITHOUT EXCEL    What is the aftertax salvage value...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $720,000. The...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $720,000. The asset qualifies for 100 percent bonus depreciation and can be scrapped for $98,000 at the end of the project’s 5-year life. The sausage system will save the firm $209,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $61,000. If the tax rate is 23 percent and the discount rate is 9 percent, what is...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $655,000. This...
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 $107,000. The sausage system will save the firm $195,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $53,000. What is the aftertax salvage value of the equipment? Aftertax salvage value...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $745,000. This...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $745,000. This cost will be depreciated straight-line to zero over the project’s 7-year life, at the end of which the sausage system can be scrapped for $103,000. The sausage system will save the firm $219,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $71,000. a)What is the aftertax salvage value of the equipment? Aftertax salvage value=...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $665,000. This...
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $665,000. This cost will be depreciated straight-line to zero over the project’s 5-year life, at the end of which the sausage system can be scrapped for $87,000. The sausage system will save the firm $187,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $39,000. If the tax rate is 22 percent and the discount rate is...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT