Question

Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.1 million. 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 $2,150,000 in annual sales, with costs of $1,140,000.The project requires an initial investment in net working capital of $150,000, and the fixed asset will have a market value of $175,000 at the end of the project. Assume that the tax rate is 35 percent and the required return on the project is 14 percent. |

Requirement 1: |

What are the net cash flows of the project for the following years? |

Answer #1

Cochrane, Inc., is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.1
million. 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 $2,150,000 in
annual sales, with costs of $1,078,327.
Required:
If the tax rate is 35 percent, what is the OCF for this project?
(Do not include the dollar sign ($). Enter your answer in...

Cochrane, Inc., is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.1
million. 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 $2,150,000 in
annual sales, with costs of $1,140,000. Assume the tax rate is 35
percent and the required return on the project is 14 percent.
Required:
What is the project’s NPV? (Do not include...

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The fixed asset will be depreciated straight-line to zero over its
three-year tax life, after which time it will be worthless. The
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costs of $845,000. The tax rate is 30 percent and the required
return on the project is 11 percent. What is the project’s NPV?
(Round your answer to 2...

Quad Enterprises is considering a new three-year expansion
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over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $2,130,000 in
annual sales, with costs of $825,000. The project requires an
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fixed asset will have a market value of $235,000 at the end...

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The fixed asset will be depreciated straight-line to zero over its
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project is estimated to generate $2,080,000 in annual sales, with
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Quad Enterprises is considering a new three-year expansion
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over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $1.735 million in
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Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.52
million. The fixed asset will be depreciated straight-line to zero
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Quad Enterprises is considering a new three-year expansion
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million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life and is estimated to have a market
value of $297260 at the end of the project. The project is
estimated to generate $2043001 in annual sales, with costs of
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Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.29
million. 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 $1,715,000 in
annual sales, with costs of $625,000. The tax rate is 21 percent
and the required return on the project is 10 percent. What is the
project’s NPV? (Do not round intermediate
calculations....

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.29
million. 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 $1,810,000 in
annual sales, with costs of $720,000. The tax rate is 25 percent
and the required return on the project is 13 percent. What is the
project’s NPV?

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