Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I'm running into an error when getting to my answer. Dog Up! Franks is looking at a new sausage system with an installed cost of

image text in transcribed
image text in transcribed
I'm running into an error when getting to my answer.
Dog Up! Franks is looking at a new sausage system with an installed cost of $515,000. 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 $81,000. The sausage system will save the firm $153,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $32,000. If the tax rate is 22 percent and the discount rate is 10 percent, what is the NPV of this project? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV Calibri (Body) 12 ' ' 101 Paste BIU V A EE E12 x fe A B 1 Sausage System 2 Useful Life 3 Annual depreciation under straight line method to make zero 4 Salvage Value 5 Net Salvage Value 6 Annual Cost Savings 7 Net Income Before Tax = Cost Savings - Depreciations 8 Net Income After Tax 9 Net Annual Cash Flows - Net Income After Tax + Depreciation 10 Initial Required Qorking Capital 11 Net Initial Cash Outflows = Initial Cost of Assets + Initial Required Working Cap. 12 13 Discount Rate 14 Net Present Value of Sausage Asset - Present Value of CF - Initial CF 515,000 5 years 103,000 81,000 63,180 153,000 50,000 39,000 142,000 32,000 547,000 10% #NAME? 15 16 17 18

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Beyond Audit Auditing Remotely And Delivering Value

Authors: Robert L. Mainardi

1st Edition

1119789605, 978-1119789604

More Books

Students also viewed these Accounting questions

Question

Does it have correct contact information?

Answered: 1 week ago