Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.58 million. The fixed asset falls into the
Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.58 million. The fixed asset falls into the three-year MACRS class (MACRS Table). The project is estimated to generate $2,310,000 in annual sales, with costs of $1,300,000. The project requires an initial investment in net working capital of $166,000, and the fixed asset will have a market value of $191,000 at the end of the project. Assume that the tax rate is 30 percent and the required return on the project is 7 percent. Requirement 1: What is the net cash flow of the project for the following years? (Do not include the dollar signs (\$).Negative amounts should be indicated by a minus sign.Enter your answers in dollars, not millions of dollars (e.g., 1,234,567). Round your answers to 2 decimal places (e.g., 32.16).) Requirement 2: What is the NPV of the project? (Do not include the dollar 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).)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started