Reference no: EM131978861
Question: H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2, 670,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2, 340,000 in annual sales, with costs of $1, 330,000. The project requires an initial investment in net working capital of $169,000, and the fixed asset will have a market value of $194,000 at the end of the project. Assume that the tax rate is 30 percent and the required return on the project is 6 percent.
What are the net cash flows of the project each year? (A negative answer should be indicated by a minus sign. Enter your answers in dollars, not millions of dollars, e.g., 1, 234, 567. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
What is the NPV of the project? (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.)
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What is the expected value of the stock now
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What are the net cash flows of the project each year
: H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2, 670,000.
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: What is the value of your investment one year from now? Multiply your rounded answer to part a by .885.
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Compute the ocf for the project
: If the tax rate is 40 percent, what is the OCF for this project? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567).
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