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Kolbys Korndogs is looking at a new sausage system with an installed cost of $789,000. 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 $789,000. This cost will be depreciated straight-line to zero over the projects six-year life, at the end of which the sausage system can be scrapped for $108,000. The sausage system will save the firm $196,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $54,000. If the tax rate is 35 percent and the discount rate is 7 percent, what is the NPV of this project?
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