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The Sausage Hut Is Looking at a New Sausage System

question 77

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The Sausage Hut is looking at a new sausage system with an installed cost of $187,400.This cost will be depreciated straight-line to zero over the project's four-year life,at the end of which the sausage system can be scrapped for $25,000.The sausage system will save the firm $69,000 per year in pretax operating costs,and the system requires an initial investment in net working capital of $9,000,which will be recouped at project end.If the tax rate is 34 percent and the discount rate is 12 ercent,what is the NPV of this project?

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