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Dog Up! Franks is looking at a new sausage system with an installed cost of $296,400....

Dog Up! Franks is looking at a new sausage system with an installed cost of $296,400. This cost will be depreciated straight-line to zero over the project's 4-year life, at the end of which the sausage system can be scrapped for $45,600. The sausage system will save the firm $91,200 per year in pretax operating costs, and the system requires an initial investment in net working capital of $21,280.

  

If the tax rate is 25 percent and the discount rate is 12 percent, what is the NPV of this project?

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Expert Solution

Solution :

The NPV of the project = - $ 18,399.87

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

jeff jeffy answered 1 year ago
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