Initial investment in net working capital

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Frank's is looking at a new sausage system with an installed cost of $540,000. This cost will depreciate straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $80,000. The sausage system will save the firm $170,000 per year in pretax operating costs and the system requires an initial investment in net working capital of $29,000. If the tax rate is 34% and the discount rate is 10%. What is the NPV of this project?

Reference no: EM131412629

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