Expansion project-requires initial fixed asset investment

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Reference no: EM13937161

Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,430,000. 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 $2,260,000 in annual sales, with costs of $1,250,000. Assume the tax rate is 40 percent and the required return on the project is 8 percent. Required: What is the project’s NPV?

Reference no: EM13937161

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