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Kolbys Korndogs is looking at a new sausage system with an installed cost of $710,000. 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 $710,000. This cost will be depreciated straight-line to zero over the projects 6-year life, at the end of which the sausage system can be scrapped for $96,000. The sausage system will save the firm $205,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $57,000. If the tax rate is 21 percent and the discount rate is 11 percent. What is the annual OCF?
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