What are the net cash flows of the project for year zero

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Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,280,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,210,000 in annual sales, with costs of $1,200,000. The project requires an initial investment in net working capital of $156,000, and the fixed asset will have a market value of $181,000 at the end of the project. Assume that the tax rate is 35 percent and the required return on the project is 11 percent. What are the net cash flows of the project for Year 0 Year 1 Year 2 and Year 3? What is the NPV of the project?

Reference no: EM131073612

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