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Franks is looking at a new sausage system with an installed cost of $435,000. This cost will be depreciated straight line to zero over the
Franks is looking at a new sausage system with an installed cost of $435,000. This cost will be depreciated straight line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $61,000. The sausage system will save the firm $255,000 per year in pretax operating costs, and the system requires an initial investment in net working capita of $20,000. If the tax rate is 35 percent and the discount rate is 9 percent what is the NPV of this project
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