Requires an initial fixed asset investment

Assignment Help Financial Management

Reference no: EM13940138

Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,190,000. 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 $2,180,000 in annual sales, with costs of $1,170,000. Assume the tax rate is 35 percent and the required return on the project is 11 percent.

What is the NPV?

Reference no: EM13940138

Questions Cloud

Assume that the risk-free rate of interest : Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 5% and the market risk premium is 6%. Van Buren currently expects to pay a year-end dividend of $1.70 a share (D1 = $1.70). Van Buren..

What is the cost of equity if the aftertax cost of debt : Dee’s Toys has a target debt-equity ratio of .55. Its WACC is 12.4 percent and the tax rate is 34 percent. What is the cost of equity if the aftertax cost of debt is 5.5 percent?

Identify the key steps in the closing process that provide : Financial Statement Accuracy Identify the key steps in the closing process that provide the most opportunity to make mistakes in processing account transactions. make atleast (2) recommendations for improving the accuracy and reliability of the infor..

Target debt—equity ratio : Sixx AM Manufacturing has a target debt—equity ratio of 0.54. Its cost of equity is 18 percent, and its cost of debt is 11 percent. If the tax rate is 32 percent, what is the company's WACC?

Requires an initial fixed asset investment : Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,190,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worth..

Componentes fundamentales de mercadeo discutidos : 1. Selecciona un producto y realiza un análisis del mismo a partir de los conceptos y componentes fundamentales de mercadeo discutidos en las unidades 1, 2 y 3 del libro Fundamentos de Marketing

Materials requisitioned and factory labor used : Materials purchased on account: Materials requisitioned and Factory labor used:

About the monthly payment : Oprah Winfrey has closed on a 42-acre estate near Santa Barbara, California, for $49,100,000. If Oprah puts 25% down and finances at 7.5% for 30 years, what would her monthly payment be?

Calculate the APR of a loan : Calculate the APR of a loan for $10,125, including loan fees of $350, at 13% for 6 years.

User Account

All Pages