Question
Michaels! is looking at a new sausage system with an installed cost of $803,400. This cost will be depreciated straight-line to zero over the project's
Michaels! is looking at a new sausage system with an installed cost of $803,400. This cost will be depreciated straight-line to zero over the project's 9-year life, at the end of which the sausage system can be scrapped for $123,600. The sausage system will save the firm $247,200 per year in pretax operating costs, and the system requires an initial investment in net working capital of $57,680.
If the tax rate is 23 percent and the discount rate is 11 percent, what is the NPV of this project?
A- $384,615.40
B- $329,095.28
C- $401,431.84
D- $364,226.74
E- $366,300.38
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