Question: Kolbys Korndogs is looking at a new sausage system with an installed cost of $720,000. This cost will be depreciated straight-line to zero over the

Kolbys Korndogs is looking at a new sausage system with an installed cost of $720,000. This cost will be depreciated straight-line to zero over the projects 6-year life, at the end of which the sausage system can be scrapped for $98,000. The sausage system will save the firm $209,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $61,000

a.What is the aftertax salvage value of the equipment?

b.What is the annual operating cash flow?

c.If the tax rate is 23 percent and the discount rate is 9 percent, what is the NPV of this project?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Kate Russell, the plant manager of a furniture manufacturing company, is in the process of developing a sales and operations plan for the upcoming year. She has obtained a forecast of expected demand...

will be Kolby's Korndogs is looking at a new sausage system with an installed cost of $800,000. This cost depreciated straight-line to zero over the project's five-year life, at the end of which the...

Dog Up Franks is looking at a new sausage system with an installed cost of $520,000. The cost depreciated straight-line zero over the projects five year life, at the end of which the sausage system...

If the tax rate is 24 percent and the discount rate is 9 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)...

Hello Tutor, actually these questions already have the answers. However, I am still confused of getting the NPV and IRR on the Spreadsheet Formula, for example =RATE(Nper;PMT;PV;FV). Would you give...

Kolby's Korndogs is looking at a new sausage system with an installed cost of $745,000. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the...

Kolby's Korndogs is looking at a new sausage system with an installed cost of $750,000. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the...

I need to find out the annual operating cash flow Kolby's Korndogs is looking at a new sausage system with an installed cost of $745,000. This cost will be depreciated straight-line to zero over the...

Kolbys Korndogs is looking at a new sausage system with an installed cost of $665,000. This cost will be depreciated straight-line to zero over the projects 5-year life, at the end of which the...

Kolbys Korndogs is looking at a new sausage system with an installed cost of $755,000. This cost will be depreciated straight-line to zero over the projects 7-year life, at the end of which the...

Kolbys Korndogs is looking at a new sausage system with an installed cost of $685,000. This cost will be depreciated straight-line to zero over the projects 5-year life, at the end of which the...

In designing an experiment, the researcher can often choose many different levels of the various factors in order to try to find the best combination at which to operate. As an illustration, suppose...

What is one example where Google can use process costing (parent company of Google is now Alphabet)?

Free cash flow to the firm is always higher than free cash flow to equity. Group of answer choices True False

Scenario: A Multi-national Corporation called The Globe has created a subsidiary called Thirst in an under-developed country called non-potable waters. This hosting country suffers from a severe...

Technology. You, as student body president,have been asked to emcee the Fourth Annual Senior Awards Banquet in three months. In this capacity, you will be introducing a local businessperson of your...

How can the Internet be helpful in a job search? (Objective 2)

What information should you list on your Experience inventory that will prepare you to write the Experience section of a rsum?