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Kolby's Korndogs is looking at a new sausage system with an installed cost of $705,000. This cost will be depreciated straight-line to zero over the
Kolby's Korndogs is looking at a new sausage system with an installed cost of $705,000. This cost will be depreciated straight-line to zero over the project's six-year life, at the end of which the sausage system can be salvaged for $95,000. The sausage system will generate operating cash flow of 181,625. the system requires an initial investment in net working capital of $55,000. The tax rate is 25%, and the discount rate is 10%.
a) What is the the net present value?
b) what is the value used for net salvage cash flow?
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