Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $7,900 per year and will cut annual operating costs by $14,000. The system will cost $48,300 to purchase and install. This system is expected to have a 6-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent and the required return is 11.5 percent. What is the NPV of purchasing the pressure cooker? Multiple Choice O O О $30,900 -$5,834 $4,909 $34,134 -$20,096

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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Chapter9: Capital Budgeting And Cash Flow Analysis
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Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $7,900 per year and will cut annual operating costs
by $14,000. The system will cost $48,300 to purchase and install. This system is expected to have a 6-year life and will be depreciated to zero using straight-line depreciation and have no
salvage value. The tax rate is 21 percent and the required return is 11.5 percent. What is the NPV of purchasing the pressure cooker?
Multiple Choice
$30,900
-$5,834
○ $4,909
о
$34,134
-$20,096
Transcribed Image Text:Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $7,900 per year and will cut annual operating costs by $14,000. The system will cost $48,300 to purchase and install. This system is expected to have a 6-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent and the required return is 11.5 percent. What is the NPV of purchasing the pressure cooker? Multiple Choice $30,900 -$5,834 ○ $4,909 о $34,134 -$20,096
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