Dog Up! Franks is looking at a new sausage system with an installed cost of $873,600. This cost will be depreciated straight-line to zero over the project's 10-year life, at the end of which the sausage system can be scrapped for $134,400. The sausage system will save the firm $268,800 per year in pretax operating costs, and the system requires an initial investment in net working capital of $62,720.

Required:

If the tax rate is 35 percent and the discount rate is 10 percent, what is the NPV of this project?

Multiple Choice

• $421,536.11

• $387,855.05

• $402,147.25

• $349,316.32

• $382,997.39