Question
In: Finance
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
|
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.15 million. The fixed asset qualifies for 100 percent bonus depreciation. The project is estimated to generate $2.23 million in annual sales, with costs of $1.25 million. The project requires an initial investment in net working capital of $150,000, and the fixed asset will have a market value of $185,000 at the end of the project. Assume that the tax rate is 23 percent and the required return on the project is 14 percent. |
| a. |
What is the net cash flow of the project for each year? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest dollar, e.g., 32.) |
| b. | What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
a.
Year 0 cash flow?
Year 1 Cash flow?
Year 2 cash flow?
Year 3 cash flow?
b.
NPV?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
H. Cochran, Inc., is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.15
million. 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 $2.23 million in
annual sales, with costs of $1.25 million. If the tax rate is 23
percent, what is the OCF for this project? (Do not round
intermediate calculations and round your answer...
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
H. Cochran, Inc., is considering a new three-year expansion
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worthless. The project is estimated to generate $3,310,000 in
annual sales, with costs of $2,330,000. Assume the tax rate is 23
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H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
H. Cochran, Inc., is considering a new three-year expansion
project that requires an initial fixed asset investment of
$2,350,000. The fixed asset will be depreciated straight-line to
zero over its three-year tax life. The project is estimated to
generate $2,470,000 in annual sales, with costs of $1,490,000. The
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H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
H. Cochran, Inc., is considering a new three-year expansion
project that requires an initial fixed asset investment of
$2,350,000. The fixed asset will be depreciated straight-line to
zero over its three-year tax life. The project is estimated to
generate $2,470,000 in annual sales, with costs of $1,490,000. The
project requires an initial investment in net working capital of
$162,000 and the fixed asset will have a market value of $197,000
at the end of the project. Assume that the tax...
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
H. Cochran, Inc., is considering a new three-year expansion
project that requires an initial fixed asset investment of
$2,400,000. The fixed asset will be depreciated straight-line to
zero over its three-year tax life. The project is estimated to
generate $3,030,000 in annual sales, with costs of $2,030,000. The
project requires an initial investment in net working capital of
$168,000 and the fixed asset will have a market value of $203,000
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H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
H. Cochran, Inc., is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.15
million. 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 $2.23 million in
annual sales, with costs of $1.25 million. The project requires an
initial investment in net working capital of $150,000, and the
fixed asset will have a market value of $185,000...
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
H. Cochran, Inc., is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.15
million. The fixed asset falls into the three-year MACRS class
(MACRS Table). The project is estimated to generate $2.23 million
in annual sales, with costs of $1.25 million. The project requires
an initial investment in net working capital of $150,000, and the
fixed asset will have a market value of $185,000 at the end of the
project. Assume that the tax...
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
H. Cochran, Inc., is considering a new three-year expansion
project that requires an initial fixed asset investment of
$2,610,000. The fixed asset falls into the three-year MACRS class
(MACRS Table). The project is estimated to generate $2,320,000 in
annual sales, with costs of $1,310,000. The project requires an
initial investment in net working capital of $167,000, and the
fixed asset will have a market value of $192,000 at the end of the
project. Assume that the tax rate is 40...
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
H. Cochran, Inc., is considering a new three-year expansion
project that requires an initial fixed asset investment of
$2,610,000. The fixed asset falls into the three-year MACRS class
(MACRS Table). The project is estimated to generate $2,320,000 in
annual sales, with costs of $1,310,000. The project requires an
initial investment in net working capital of $167,000, and the
fixed asset will have a market value of $192,000 at the end of the
project. Assume that the tax rate is 40...
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