New sausage system with an installed cost

Assignment Help Financial Management
Reference no: EM13873925

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $655,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $107,000. The sausage system will save the firm $195,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $53,000.

Required:

If the tax rate is 34 percent and the discount rate is 8 percent, what is the NPV of this project?

Reference no: EM13873925

Questions Cloud

Other types of evidence like eye witness accounts : One day you are home visiting your grandmother and she asks you about an article she read that details a murder conviction based on DNA evidence yet she doesn''t really understand it.
Depreciated straight-line to zero over its six-year life : Your firm is contemplating the purchase of a new $660,000 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. It will be worth $51,000 at the end of that time. If the tax rate is 40 percent,..
How does antimicrobial resistance happen : How does antimicrobial resistance happen? What is the process? What can you personally do to slow the rate of antimicrobial resistance?
Discuss transaction and translation risk : Define, explain and discuss transaction and translation risk. Include the discussion impact on financial statements related to both types of risk and when the foreign currency is the functional currency, discuss the impact of the US DOLLAR weakening ..
New sausage system with an installed cost : Kolby’s Korndogs is looking at a new sausage system with an installed cost of $655,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $107,000. If the..
Differences between medical model and public health model : Outline the differences between the medical model, public health model and human services model
How that status might affect achieved status : Write three paragraphs for each scenario. Each paragraph should be 3-4 sentences long. Demonstrate that you have researched the cultures by providing 1-2 academic references.
Eradicated-romano-british culture : eradicated-Romano-British culture
Christy general hospital, a not for profit organization : Christy General Hospital, a not for profit organization, accounts for its activities using a General Fund ( GF), and three restricted fund groups, Specific Purpose Funds ( SPF), Endowment Funds ( EF), and Plant Replacement and Expansion Funds ( PR..

Reviews

Write a Review

Financial Management Questions & Answers

  Conducted taste tests for a new coffee product

A company that franchises coffee houses conducted taste tests for a new coffee product. The company prepared four blends and randomly chose individuals to do a taste test and state which of the four blends they liked best. Results of the taste test f..

  What is the IRR of the investment

A large cow barn will cost $150,000 to build today and you figure it will add $18,000 per year to your after-tax cash flows for the next ten years. If the salvage value of the building is 50% after ten years and the cost of capital is 7%, what is the..

  Developing an asset financing plan

Christensen & Assoc. is developing an asset financing plan. Christensen has $1,000,000 in current assets, of which 15% are permanent, and $700,000 in fixed assets. The current long-term rate is 9%, and the current short-term rate is 6.5%. Christensen..

  Interests will company be paying over the five-year period

Double Circle, Inc. just signed a five-year loan agreement to purchase a piece of property. If the property cost was $160,000, what would be the size of each equal semi-annual payment to amortize the loan at an interest rate of 10%? How much interest..

  What is the smallest expected gain

A stock has an annual return of 11 percent and a standard deviation of 54 percent. What is the smallest expected gain over the next year with a probability of 1 percent?

  Reduce industry profitability

Which of the following tends to reduce industry profitability?

  What is the required percentage rate of return of equity

Companies U and L are identical in every respect except that U is unlevered while L has $10 million of 5.9% bonds outstanding. Assume that (1) all of the MM assumptions are met, (2) there are no corporate or personal taxes, (3) EBIT is $2.1 million, ..

  Both expect to earn the same rate of return

Jesse, age 20, plans to save $3,000 a year for 10 years starting at age 24. Alicia, age 20, plans to save $3,000 a year for 10 years starting at age 31. Both expect to earn the same rate of return. Which plan is better given that neither of these ind..

  Expected to pay their first annual dividend

A company is expected to pay their first annual dividend three years from now. That payment will be $0.50 a share. Starting in year four, the company will increase the dividend by 4% per year. The required return is 12%. What is the estimated value o..

  What overall net income would be produced

What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent?

  Excess capacity-what is walters target fixed assets

Walter Industries has $8 billion in sales and $2.8 billion in fixed assets. Currently, the company's fixed assets are operating at 90% of capacity. What is Walter's target fixed assets/Sales ratio? What level of sales could Walter Industries have obt..

  What would your ending wealth position be

You invested $10,000 10 years ago into Fly-By-Night Fund which has reported performance (average annual total return) of 11% over this 10-year period. The front end load of 3%, an expense ratio of 2% was charged. What would your ending wealth positio..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd