Kolbys korndogs is looking at a new sausage system with an

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Reference no: EM13619846

Kolby's Korndogs is looking at a new sausage system with an installed cost of $765,000. This cost will be depreciated straight-line to zero over the project's six-year life, at the end of which the sausage system can be scrapped for $100,000. The sausage system will save the firm $188,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $46,000.

Required:
If the tax rate is 35 percent and the discount rate is 7 percent, what is the NPV of this project?

Reference no: EM13619846

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