Question: Kolbys Korndogs is looking at a new sausage system with an installed cost of $938,000. 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 $938,000. This cost will be depreciated straight-line to zero over the projects seven-year life, at the end of which the sausage system can be scrapped for $113,000. The sausage system will save the firm $201,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $59,000.

If the tax rate is 30 percent and the discount rate is 7 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!

Develop three people outcomes as well as related substrategies and tactics to improve your organizations focus on alignment. Complete the tactical map template. Prepare an argument in support of your...

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...

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...

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.)...

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...

Ice cubes at 20F, each occupying a volume of 0.4 in3, are added to an insulated container holding one quart of water at 70F. Estimate the equilibrium temperature, or the mass of ice that melts, if...

Daydream operates a hot dog stand adjacent to a football stadium. To plan for the future, it wants to determine its cost behaviour patterns and has collected the following monthly data for operating...

The number of member nations of the World Trade Organization has increased considerably in recent years. In addition, some nonmember countries have observer status in the WTO. Such status requires...

what are the factors that shape your organization external competitiveness to recruit and retain employees

A proposal was put forward in 2012 by the Coalition government that would allow employers in small and medium- sized businesses to offer shares in the company in exchange for giving up their rights...

In the Meteor case study, how reasonable do you think were the terms of the redundancy package? Look up the tribunal cases referring to relocation and equal opportunities. Do you think that the high...

Consider spotlight on the law 4.2 and decide: What was the basis upon which Wilson had been dismissed out of the four admissible reasons? Do you think he was successful in his claim? What is the...