Dog Up! Franks Is Looking at a New Sausage System

question 28

Multiple Choice

Dog Up! Franks is looking at a new sausage system with an installed cost of $397,800.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 $61,200.The sausage system will save the firm $122,400 per year in pretax operating costs,and the system requires an initial investment in net working capital of $28,560.All of the net working capital will be recovered at the end of the project.The tax rate is 33 percent and the discount rate is 9 percent.What is the net present value of this project?

• A)-$41,311
• B)-$7,820
• C)$81,507
• D)$98,441
• E)$118,821

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Definitions:

Balanced Diet

A diet that contains the appropriate proportions of carbohydrates, fats, proteins, vitamins, minerals, and water necessary to maintain good health.

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A severe form of premenstrual syndrome characterized by significant mood disturbances and physical symptoms.

Premenstrual Syndrome

A collection of physical and emotional symptoms that occur in many women 1-2 weeks before menstruation.

Polycystic Ovary Syndrome

A hormonal disorder common among women of reproductive age, characterized by irregular menstrual periods, excess hair growth, and polycystic ovaries.