Question
1. Fox Hollow Franks is looking at a new system with an installed cost of $540,000. This equipment is depreciated at a rate of 20
1. Fox Hollow Franks is looking at a new system with an installed cost of $540,000. This equipment is depreciated at a rate of 20 percent per year (Class 8) over the projects five-year life, at the end of which the sausage system can be sold for $80,000. The sausage system will save the firm $170,000 per year in pre-tax operating costs, and the system requires an initial investment in net working capital of $29,000.
If the tax rate is 34 percent and the discount rate is 10 percent, what is the NPV of this project? (Do not round your intermediate calculations. Round the final answer to 2 decimal places.)
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