Question
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 five-year life, at the end of which the sausage system can be scrapped for $111,000. The sausage system will save the firm $199,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $57,000. |
Required: |
What is the aftertax salvage value of the equipment? (Do not round intermediate calculations. Round your answer to the nearest whole number (e.g., 32).) |
Aftertax salvage value | $ |
What is the annual operating cash flow? (Do not round intermediate calculations. Round your answer to the nearest whole number (e.g., 32).) |
OCF | $ |
If the tax rate is 34 percent and the discount rate is 8 percent, what is the NPV of this project? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
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