Dog Up! Franks is looking at a new sausage system with an installed cost of $850

Question

Dog Up! Franks is looking at a new sausage system with an installed cost of $850,200. 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 $130,800. The sausage system will save the firm $261,600 per year in pretax operating costs, and the system requires an initial investment in net working capital of $61,040 Required: If the tax rate is 31 percent and the discount rate is 13 percent. what is the NPV of this project? $-61,953.38 $-117,306.62 $-140,909.65 $-85,556.41 $-89,834.23

Explanation / Answer

$ -61,953.38

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