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Calculating NET PRESENT VALUE (NPV)

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Frank is looking at a new sausage system with an installed cost of $483,600. This cost will be depreciated straight-line to zero over the project's 5-year life, at the end of which the sausage system can be scrapped for $74,400. The sausage system will save the firm $148,800 per year in pretax operating costs, and the system requires an initial investment in net working capital of $34,720. If the tax rate is 33 percent and the discount rate is 15 percent, the NPV of this project is $

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