Dog Up! Franks is looking at a new sausage system with an installed cost of $800,000. 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 $20,000. The sausage system will save the firm $360,000 per year in pretax operating costs. The system also requires an initial investment in net working capital of $48,000, which will be returned in full at the end of the project. Assume that there are no other cash flows. If the tax rate is 25 percent and the discount rate is 12 percent, what is the cash flow from asset of this project in the last year of the project (t=5)? A. $333,000 B. $373,000 C. $325,000 D. $358,000
Dog Up! Franks is looking at a new sausage system with an installed cost of $800,000. This cost will be
A. |
$333,000 |
|
B. |
$373,000 |
|
C. |
$325,000 |
|
D. |
$358,000 |
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