Kolby’s Korndogs is looking at a new sausage system with an installed cost of $896,000. This cost will be depreciated straight-line to zero over the project’s seven-year life, at the end of which the sausage system can be scrapped for $101,000. The sausage system will save the firm $189,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $47,000.
What is the aftertax salvage value of the equipment? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Aftertax salvage value $
What is the annual operating cash flow? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
OCF $
If the tax rate is 30 percent and the discount rate is 6 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
NPV