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Dog Up! Franks is looking at a new sausage system with an installed cost of...

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Accounting

Dog Up! Franks is looking at a new sausage system with an installed cost of $670,800. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the sausage system can be scrapped for $103,200. The sausage system will save the firm $206,400 per year in pretax operating costs, and the system requires an initial investment in net working capital of $48,160.

If the tax rate is 22 percent and the discount rate is 11 percent, what is the NPV of this project?

Multiple Choice

  • $162,206.44

  • $211,026.91

  • $187,169.77

  • $225,941.34

  • $200,978.01

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