The required return on the project

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Reference no: EM131499822

H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,160,000. 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 $2,170,000 in annual sales, with costs of $1,160,000. Assume the tax rate is 40 percent and the required return on the project is 12 percent.

Reference no: EM131499822

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