An asset used in a four-year project falls in the five-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $7,500,000 and will be sold for $1,790,000 at the end of the project.

Required:

If the tax rate is 34 percent, what is the aftertax salvage value of the asset? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Aftertax salvage value

$

table: http://lectures.mhhe.com/connect/0073382469/Images/macrs_table.jpg

Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,520,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,290,000 in annual sales, with costs of $1,280,000. Assume the tax rate is 40 percent and the required return on the project is 7 percent.

Required:

What is the projects NPV? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567). Round your answer to 2 decimal places (e.g., 32.16).)