Considering a new three-year expansion project

Assignment Help Financial Management

Reference no: EM131583543

H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,220,000. 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 $2,190,000 in annual sales, with costs of $1,180,000. Assume the tax rate is 30 percent and the required return on the project is 13 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: EM131583543

Questions Cloud

What is the price per share of the company stock : Ward Corp. is expected to have an EBIT of $1,950,000 next year. What is the price per share of the company's stock?

What was caterpillar book debt-to-value ratio : What was Caterpillar’s book debt-to-value ratio? Which measure should you use to calculate the company’s cost of capital?

At what price will the stock reach an equilibrium : A share of stock with a beta of .85 now sells for $58. At what price will the stock reach an “equilibrium” at which it is perceived as fairly priced today?

What is the expected forward rate : Short term interest rates are 3 percent in Japan and 5 percent in the United States. What is the expected forward rate?

Considering a new three-year expansion project : H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,220,000.

What is the amount that goes toward paying off the principal : What is the amount that goes toward paying off the principal? What is the total amount of interest paid?

The hamptons home of famed socialite hits the market : Calculate the annual compound growth rate of the house price during the period when the house was owned by Robert G.

Find the price of call option on the stock : Find the price of a call option on the stock that has a strike price is of $24 and that expires in 1 year.

What is hedging and how is it different from diversification : What is hedging and how is it different from diversification?

User Account

All Pages