Require initial fixed asset investment

Reference no: EM131350825

H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,340,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,230,000 in annual sales, with costs of $1,220,000. The project requires an initial investment in net working capital of $158,000, and the fixed asset will have a market value of $183,000 at the end of the project. Assume that the tax rate is 40 percent and the required return on the project is 9 percent. What is the project's NPV?

Reference no: EM131350825

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