Project Evaluation

Makrove9m · #1 Apr 1, 2007, 03:45 PM

Kolby's Korndogs is looking at a new sausage system with an installed cost of 490,000. This cost will be depreciated straight lint to zero over the projects five year life, at the end of which the sausage system can be scrapped for 40,000. The sausage system will save the firm 146,000 per year in pretax operating costs, and the system requires an inital investment in net working capital of 35,000. If the tax rate is 34 percent and the discount rate is 8 percent, what is the NPV of this project. How do you go about solving this problem and what is the answer in detail. Thanks

Noah Mudzimu · Apr 6, 2007, 05:23 AM

Discuss the link between NPV and profitability index in project Management



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