What is the npv of the project

Assignment Help Financial Management

Reference no: EM131903421

H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,460,000. The fixed asset falls into the three-year MACRS class (MACRS Table).

The project is estimated to generate $2,270,000 in annual sales, with costs of $1,260,000. The project requires an initial investment in net working capital of $162,000, and the fixed asset will have a market value of $187,000 at the end of the project. Assume that the tax rate is 35 percent and the required return on the project is 8 percent.

1. What is the net cash flow 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 2 decimal places, e.g., 32.16.)

2. 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.)

NPV :?

Reference no: EM131903421

Questions Cloud

How much can she spend each year after she retires : How much can she spend each year after she retires? Her first withdrawal will be made at the end of her first retirement year and she will earn 7% per year.

Could an asset account ever have a credit balance : How do you tell what the normal balance of an account should be: debit or credit? Could an asset account ever have a credit balance

Analyze the inventory accounts : Renka Shoe Company makes loafers. During the most recent? year, Renka incurred total manufacturing costs of $ 20,000,000. Of this? amount,

What is the expected cost : What is the expected cost (and the corresponding standard deviation) if company uses forward hedge? (use $x,xxx and $x,xxx)

What is the npv of the project : What is the net cash flow of the project each year?What is the NPV of the project?

Best estimate of the stock price per share : If Weidner has 25 million shares of stock outstanding, what is the best estimate of the stock's price per share?

Why is the page replacement algorithm run in the kernel : Why is the page replacement algorithm run in the kernel instead of in an external memory manager? How about SEND capabilities?

What are the issues surrounding ones foreign exchange : What are the issues surrounding ones foreign exchange?What is the impact when a country's currency is affixed to the dollar?

What is value of the bonds payments : Given the zero coupon rates below, what is value of the bonds payments?

User Account

All Pages