Management Solved: Systematic versus Unsystema... You Want To Create A Portfolio Equall... You Wa BE CAREFUL WHEN MAKING YOUR CALCULATIONS. TAKE NOTE THAT THIS IS A OPEN BOOK OPEN NOTES EXAM. THEREFORE, HAVING CORRECT CALCULATION WEIGH MORE IN SCORING THE EXAM. EACH PROBLEM IS WORTH 20 PTS. Chapter 7. Making Capital Investment Decisions PROBLEM 1 Project Evaluation Dog Up! Franks is looking at a new sausage system with an installed cost of $345,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $25,000. The sausage system will save the firm $85,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $20,000. If the tax rate is 34 percent and the discount rate is 10 percent, what is the NPV of this project? PROBLEM 2 tomnlements