About the net present value

Assignment Help Financial Management

Reference no: EM131332213

H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,580,000. 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 $2,310,000 in annual sales, with costs of $1,330,000. Assume the tax rate is 30 percent and the required return on the project is 6 percent.

What is the project’s NPV? (A negative answer should be indicated by a minus sign. 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.)

Net present value $

Reference no: EM131332213

Questions Cloud

Percy cost of common equity : Percy motors has a target capital structure of 40% of debt and 60% of common equity, with no preferred stock. The pre tax cost of debt is 9% and it's corporate tax rate is 40%. Percy CFO estimate that the companys WACC After tax is 9.96%. What is ..

What is the expected dividend next year : Dishwasher’s Delights plows back 68.50% of its earnings to take on projects that earn the firm a rate of return of 13.50%. What is the expected growth rate for Dishwasher’s common stock? What is the expected dividend next year?

Its earnings does hornberger plow back into the firm : Hornberger, Inc. recently paid a dividend of $2.00 per share. The next dividend is expected to be $2.02 per share. Hornberger has a return on equity of 11.40%. What percentage of its earnings does Hornberger plow back into the firm?

Underlying value of the wfm stock per share : You expect dividends to grow at 5% per year into perpetuity. Wfm beta is .85. The current risk free rate is 2.9%, and the expected return on the market portfolio is 7.4%. Use the CAPM to estimate wfm required return on equity. What is the underlyi..

About the net present value : H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,580,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be wor..

Working capital will revert back to normal at end of : Your firm is contemplating the purchase of a new $636,000 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. It will be worth $44,000 at the end of that time. You will be able to reduce wor..

Where are there breaches of ethical behavior : Address the following questions: What are the ethical issues? Where are there breaches of ethical behavior? How could each ethical theory you cite help people think about what constitutes virtuous or ethical behavior

Identify the payoff that each player can guarantee : Identify the payoff that each player can guarantee for himself in each of the following two-player zero-sum game using mixed strategies and using behavior strategies.

Pretax cost of debt : ABC corp has a target capital structure of 60 percent common stock, 5 percent preferred stock and a 35 percent debt. It's cost of common stock is 10% , the cost of preferred is 5% and the pretax cost of debt is 7%. The relevant tax rate is 30% wha..

User Account

All Pages