Considering new three-year expansion project

Assignment Help Financial Management

Reference no: EM131880103

H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,430,000. The fixed asset falls into the three-year MACRS class (MACRS Table). The project is estimated to generate $2,260,000 in annual sales, with costs of $1,250,000. The project requires an initial investment in net working capital of $161,000, and the fixed asset will have a market value of $186,000 at the end of the project. Assume that the tax rate is 40 percent and the required return on the project is 8 percent.

What is the net cash flow of the project each year?

Year Cash Flow

What is the NPV of the project? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV $

Reference no: EM131880103

Questions Cloud

Boundary for the value of european vanilla put option : What is the lower boundary for the value of a European vanilla put option on this asset with strike price of $80?

Calculate the interest rate earned in an investment : Calculate the interest rate earned in an investment that requires $759 to buy and pays back $1,000 in 3 years from now. The investment compounds quarterly.

What is the true rate of interest that the company : what is the true rate of interest that the company is paying for the borrowed? money?

What is the current value of? jim bonds : In view of the? interest-rate increase to 12?%, what is the current value of? Jim's bonds?

Considering new three-year expansion project : H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,430,000.

What is the yield to maturity on the company debt : What is the required return on the corporation’s stock? What is the yield to maturity on the company’s debt?

What is the maximum price you will pay for bond : What is the maximum price you will pay for a bond with a face value of ?$900 and a coupon rate of 15?%,

How do you think you fit into the biosphere of the planet : How do you think you fit into the biosphere of the planet? Why Do you think the recent storms are because of human induced global warming? How do you know?

Compute the reliability of the robot : Designers want to improve the reliability by adding a backup component. Due to space limitations, only one backup can be added.

User Account

All Pages