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MBA, PHD
Phoniex
Jul-2007 - Jun-2012
Corportae Manager
ChevronTexaco Corporation
Feb-2009 - Nov-2016
Question description
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Kolby’s Korndogs is looking at a new sausage system with an installed cost of $938,000. 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 $113,000. The sausage system will save the firm $201,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $59,000. |
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If the tax rate is 30 percent and the discount rate is 7 percent, what is the NPV of this project?  |
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