Problem 9-14 Project Evaluation [LO 2] Dog Up! Franks is looking at a new sausage system with an installed cost of $735,000. This cost will be depreciated straight-line to zero over the project’s 7-year life, at the end of which the sausage system can be scrapped for $101,000. The sausage system will save the firm $215,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $67,000. If the tax rate is 21 percent and the discount rate is 8 percent, what is the NPV of this project?

Problem 9-14 Project Evaluation [LO 2] Dog Up! Franks is looking at a new sausage system with an installed cost of $735,000. This cost will be depreciated straight-line to zero over the project’s 7-year life, at the end of which the sausage system can be scrapped for $101,000. The sausage system will save the firm $215,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $67,000. If the tax rate is 21 percent and the discount rate is 8 percent, what is the NPV of this project?

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

9th Edition

ISBN:9781305635937

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter12: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 11P: REPLACEMENT ANALYSIS St. Johns River Shipyards is considering the replacement of an 8-year-old...

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Problem 9-14 Project Evaluation [LO 2]

Dog Up! Franks is looking at a new sausage system with an installed cost of $735,000. This cost will be depreciated straight-line to zero over the project’s 7-year life, at the end of which the sausage system can be scrapped for $101,000. The sausage system will save the firm $215,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $67,000. If the tax rate is 21 percent and the discount rate is 8 percent, what is the NPV of this project?

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