H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $
Posted: Tue Nov 16, 2021 8:22 am
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 $2,290,000 in annual sales, with costs of $1,310,000. The
project requires an initial investment in net working capital of
$160,000 and the fixed asset will have a market value of
$195,000 at the end of the project. Assume that the tax rate is 21
percent and the required return on the project is 10 percent.
What are the net cash flows of the project each
year? (A negative answer should be indicated by a
minus sign. Do not round intermediate calculations and round your
answers to the nearest whole number, e.g., 32.)
A)
Year 0 Cash Flow =
Year 1 Cash Flow =
Year 2 Cash Flow =
Year 3 Cash Flow =
B)
NPV =
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 $2,290,000 in annual sales, with costs of $1,310,000. The
project requires an initial investment in net working capital of
$160,000 and the fixed asset will have a market value of
$195,000 at the end of the project. Assume that the tax rate is 21
percent and the required return on the project is 10 percent.
What are the net cash flows of the project each
year? (A negative answer should be indicated by a
minus sign. Do not round intermediate calculations and round your
answers to the nearest whole number, e.g., 32.)
A)
Year 0 Cash Flow =
Year 1 Cash Flow =
Year 2 Cash Flow =
Year 3 Cash Flow =
B)
NPV =