Kolbys Korndogs is looking at a new sausage system with an installed cost of $745,000. This cost will be depreciated straight-line to zero over the projects 7-year life, at the end of which the sausage system can be scrapped for $103,000. The sausage system will save the firm $219,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $71,000.

a)What is the aftertax salvage value of the equipment?

Aftertax salvage value=

b) What is the annual operating cash flow?

OCF=

c) If the tax rate is 23 percent and the discount rate is 10 percent, what is the NPV of this project?

NPV=