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Hog Tavern 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
- Hog Tavern 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 projects 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 system requires initial investment in the net working capital of $20,000, which will be recovered in the last year of the project. Assume the tax rate is 35 percent and the discount rate is 9 percent. What is the NPV of this project?
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