Reference no: EM132751771
Kolby's Korndogs is looking at a new sausage system with an installed cost of $715,000. This cost will be depreciated straight-line to zero over the project's 6-year life, at the end of which the sausage system can be scrapped for $97,000. The sausage system will save the firm $207,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $59,000.
Problem 1: What is the aftertax salvage value of the equipment? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Problem 2: What is the annual operating cash flow? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Problem 3: If the tax rate is 22 percent and the discount rate is 8 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.)
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