Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $1, 860,000. The fixed asset will be depreciated

image text in transcribed
Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $1, 860,000. The fixed asset will be depreciated straight-line zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1.950,000 in annual sales, with costs of $1, 060,000. The project requires an initial investment in net working capital of $150,000, and the fixed asset will have a market value of $175,000 at the end of the project. Assume that the tax rate is 35 percent and the required return on the project is 14 percent. What are the net cash flows of the project for the following years? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers in dollars, not millions of dollars (e.g- 1, 234, 567).) What is the NPV of the project? (Do not round intermediate calculations. 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).) NPV $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions

Question

1. Identify six different types of history.

Answered: 1 week ago

Question

2. Define the grand narrative.

Answered: 1 week ago

Question

4. Describe the role of narratives in constructing history.

Answered: 1 week ago