QUESTION
106. The Sausage Hut is looking at a new sausage system with an installed cost of $438,000. This cost will be depreciate
Category: Business
Subject: Finance
Due Date: 02/03/2016
Question Asked: 2016-02-03 03:34:22
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106. The Sausage Hut is looking at a new
sausage system with an installed cost of $438,000. This cost will be
depreciated straight-line to zero over the project's 4-year life, at the end of
which the sausage system can be scrapped for $69,000. The sausage system will
save the firm $129,000 per year in pretax operating costs, and the system
requires an initial investment in net working capital of $29,000, which will be
recouped at project end. If the tax rate is 35 percent and the discount rate is
9 percent, what is the NPV of this project?
A. -$18,870
B. -$6,320
C. $2,560
D. $14,410
E. $26,880
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106. The Sausage Hut is looking at a new sausage system with an installed cost of $438,000. This cost will be depreciate
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Posted on 2016-02-03 03:34:22
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...he sausage system will save the firm $129,000 per year in pretax operating costs, and the system requires an initial inves...
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