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H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,250,000. The fixed asset falls into the
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,250,000. The fixed asset falls into the three-year MACRS class (MACRS Table). The project is estimated to generate $2,200,000 in annual sales, with costs of $1,190,000. The project requires an initial investment in net working capital of $155,000, and the fixed asset will have a market value of $180,000 at the end of the project. Assume that the tax rate is 40 percent and the required return on the project is 10 percent. What is the net cash flow of the project each year? (A negative answer should be indicated by a minus sign. Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answers to 2 decimal places, e.g-, 32.16.) Year Cash Flow What is the NPV of the project? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $
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