Kolby\'s Korndogs is looking at a new sausage system with an installed cost of $

Question

Kolby's Korndogs is looking at a new sausage system with an installed cost of $635,000 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 $99,000 The sausage system will save the firm $187,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $45,000 Required: If the tax rate is 34 percent and the discount rate e 8 percent, what is the NPV of this protect? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Explanation / Answer

Based on the information provided, the NPV of the project is -$ 147,624.00 Post Tax Savings per year are 66% of $ 187,000 = 123420 $

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