PART 5 Capital Budgeting idering a new LO2 9. Calculating Project OCF. H. Cochran, Inc., is consid expansion project that requires an initial fixed asset invest LO 3 $1,950,000. The fixed asset will be depreciated straight-line t zero over in three-year tax life, after which time it will be worthless. Th estimated to generate $2,145,000 in annual sales, with costs of $12 If the tax rate is 35 percent, what is the OCF for this project? 10. Calculating Project NPV. In the previous problem, suppose the LO 2 required return on the project is 14 percent. What is the project's NPV? LO 2 11. Calculating Project Cash Flow from Assets. In the previous problem. suppose the project requires an initial investment in net working capital df $150,000, and the fixed asset will have a market value of $175,000 at the end of the project. What is the project's Year 0 net cash flow? Year 1? Ye 2? Year 3? What is the new NPV? LO LO 2 12. NPV and Modified ACRS. In the previous problem, suppose the fixed ass actually falls into the three-year MACRS class. All the other facts are the same. What is the project's Year 1 net cash flow now? Year 2? Year 3 What is the new NPV? nt n ne sausage systerm