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

Analyze the critical path in project management as the longest duration path through a project, dictating the minimum completion time.

Comprehend the fundamentals of break-even analysis in project financial planning.

Understand the importance of strategic alignment with stakeholders and adapting to competitive environments in project outcomes.

Understand the importance of setting long-term goals for effective short-term time management.

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Definitions:

Inventories

Assets held for sale in the ordinary course of business, or in the process of production for such sale, or in the form of materials to be consumed in the production process.

Basic Earning Power

A measure of a firm's profitability and efficiency, calculated as earnings before interest and taxes divided by total assets.

Debt Ratio

The ratio of total debt to total assets, it measures the percentage of funds provided by investors other than preferred or common shareholders. Also called debt-to-assets ratio.

ROE

Return on Equity; a measure of the profitability of a business in relation to the equity.