Question
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
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.
What is the NPV with the 14 percent discount rate?
$121,659.46 | ||
$53,282,86 | ||
$165,324.55 | ||
$98,438.64 | ||
-$120,342.56 |
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