Cori's Meats is looking at a new sausage system with an installed cost of $450,000. This...

Cori's Meats is looking at a new sausage system with an installed cost of $450,000. 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 $64,000. The sausage system will save the firm $240,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $23,000. If the tax rate is 21 percent and the discount rate is 9 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.).

Expert Solution

=-450000-23000+23000/1.09^5+64000*(1-21%)/1.09^5+((240000-450000/5)*(1-21%)+450000/5)/9%*(1-1/1.09^5)
=385801.2412

jeff jeffy answered 2 years ago

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