Tippit-the-Strong Company is looking at a new sausage system with an installed cost of $300,000. This asset will be depreciated according to MACRS 5 years over the projects three-year life, at the end of which the sausage system can be sold for $90,000. The sausage system will create annual savings of $200,000 (before taxes and depreciation), and the system requires an initial investment in net working capital of $40,000. The tax rate is 30 percent.

Based on the discounted payback period criteria, you would accept this project if you require the project pays back in three years.

True

False