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Kolbys Korndogs is looking at a new sausage system with an installed cost of $665,000. This cost will be depreciated straight-line to zero over the

Kolbys Korndogs is looking at a new sausage system with an installed cost of $665,000. This cost will be depreciated straight-line to zero over the projects 5-year life, at the end of which the sausage system can be scrapped for $85,000. The sausage system will save the firm $183,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $35,000. What is the aftertax salvage value of the equipment? What is the annual operating cash flow? If the tax rate is 22 percent and the discount rate is 8 percent, what is the NPV of this project?

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