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What is the NPV for the new project at Dog UP! Franks?

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Dog UP! Franks is looking at a new sausage system with an installed cost of $440,000. This cost will be depreciated straight-line to zero over the project's fiver-year life, at the end of which the sausage system can be scrapped for $60,000. The sausage system will save the firm $130,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $34,000. If the tax rate is 34% and the discount rate is 10%, what is the NPV of this project?

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Solution Summary

The solution explains how to calculate the NPV of the project in the attached Excel file.

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