Question
Dog Up! Franks is looking at a new sausage system with an installed cost of $273,000. This cost will be depreciated straight-line to zero over
Dog Up! Franks is looking at a new sausage system with an installed cost of $273,000. This cost will be depreciated straight-line to zero over the project's 8-year life, at the end of which the sausage system can be scrapped for $42,000. The sausage system will save the firm $84,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $19,600. Required: If the tax rate is 32 percent and the discount rate is 9 percent, what is the NPV of this project? rev: 09_18_2012 $93,825.67 $103,589.09 $113,566.92 $108,158.97 $117,922.39
Your firm is contemplating the purchase of a new $1,478,400 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $132,000 at the end of that time. You will save $580,800 before taxes per year in order processing costs and you will be able to reduce working capital by $130,139 (this is a one-time reduction). |
Required : |
If the tax rate is 33 percent, what is the IRR for this project? (Do not round your intermediate calculations.) |
rev: 09_18_2012
23.05%
24.20%
21.90%
22.13%
18.24%
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