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?

Expert Solution

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

Cell reference -

jeff jeffy answered 8 months ago

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