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Dog Up! Franks is looking at a new sausage system with an installed cost of $900...

  1. Dog Up! Franks is looking at a new sausage system with an installed cost of $900 which will be fully depreciated straight-line over the project's 3-year life and then scrapped for $150. The system will save the firm $280/year in pretax operating costs, and the system requires an initial investment in a constant level of net working capital of $65. If the tax rate is 21% and the discount rate is 9%, what should the firm do?

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Firm should reject the project.

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jeff jeffy answered 2 years ago
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