Question: 1. (Project Evaluation ) Dog up! Frank is looking at a new sausage system with an installed cost of $560000.this cost will be depreciated straight-line to zero over the project 's five-year life, at the end of which the sausage system can be scrapped for$85000.the sausage system will save the firm $165000per year in pretax operating costs ,and the system requires an initial investment in net working capital of $29000.if the tax rate is 34 percent and the discount rate id 10percent, what is the npv of this project?
2. (Project Evaluation) your firm is contemplating the purchase of a new $720,000 computer-based order entry system. The system will be depreciated straight -line to zero over its 5year life. it will be worth $75,000at the end of that time. you will save $260,000 before taxes per year in order processing costs , and you will be able to reduce working capital by$110,000(this is a one-time reduction). if the tax rate is 35percent , what is the IRR fir this project?
3. In the previous problem, suppose your required return on the project is 20percent and your pretax cost saving s are $300,000per year. Will you accept the project? what if the pretax cost saving are $240,000per year? At what level of pretax cost savings would you be indifferent between accepting the project and not accepting it?