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9. Kolbys Korndogs is looking at a new sausage system with an installed cost of $655,000. This cost will be depreciated straight-line to zero over
9. Kolbys Korndogs is looking at a new sausage system with an installed cost of $655,000. This cost will be depreciated straight-line to zero over the projects five-year life, at the end of which the sausage system can be scrapped for $85,000. The sausage system will save the firm $183,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $35,000. If the tax rate is 35%, what is the IRR for this project?
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