System requires initial investment in net working capital

Assignment Help Financial Management

Reference no: EM132045235

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $801,000. 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 $112,000. The sausage system will save the firm $200,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $58,000.

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

Reference no: EM132045235

Questions Cloud

Market rate of return : You sold the bond today when the market rate of return is 4.5%. If the inflation rate for the past year was 2.0%.

How is the agenda of national nurses used : How is the agenda of National Nurses United used to promote a mechanism used to engage and attract policy makers?

Describe business decisions of a multi-year integrated case : Previously, you employed academic writing to describe business decisions made related to a segment of a multi-year integrated case study, and you suggested.

What are the biggest challenges to small businesses today : Other than raising needed capital, what are the biggest challenges to small businesses today? Global competition

System requires initial investment in net working capital : The sausage system will save the firm $200,000 per year in pretax operating costs and system requires an initial investment in net working capital of $58,000.

Gain or loss would be reported at the time of the sale : If the asset was sold for $55,000 and was being depreciated using the straight line method as was reported at book value, what amount of gain or loss would

The amount of the gain or loss on the bond retirement : Determine the amount of the gain or loss on the bond retirement.

Total return for the stock for the year : Using adjusted closing prices only, what was the Total Return for the stock for the year?

Perform a swot analysis on chosen organization : The organization can be a business or a nonprofit, and you may represent any level of the organization (e.g., team, division, whole) in your analysis.

User Account

All Pages