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

A) Dog Up! Franks is looking at a new sausage system with an installed cost of $506559. 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 $73471. The sausage system will save the firm $175487 per year in pretax operating costs, and the system requires an initial investment in net working capital of $30680. If the tax rate is 38 percent and the discount rate is 9 percent, what is the NPV of this project?

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Expert Solution

Solution :

The NPV of this project is = $ 85,253.86

= $ 85,254 ( when rounded off to the nearest whole number )

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

jeff jeffy answered 1 year ago
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