Question: 6. Bendog's Franks is looking at a new system with an installed cost of $425,000. This equipment is depreciated at a rate of 20% per

6. Bendog's Franks is looking at a new system with an

6. Bendog's Franks is looking at a new system with an installed cost of $425,000. This equipment is depreciated at a rate of 20% per year over the project's life of 6 years, at the end of which the system can be sold for $100,000. The sausage system will save the firm $104,500 per year in pretax operating costs, and the system requires an initial investment in net working capital of $23,500. If the tax rate is 37% and the discount rate is 11%, should Bendogs Franks buy the system based on the NPV rule? Will Bendog's Franks change its mind if the return is 8% and everything else stays the same

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