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. Assume the tax rate is 35 percent and the required return on the project is 14 percent. |

Required: |

What is the project’s NPV? |

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 $2.67
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 $2,340,000 in
annual sales, with costs of $1,330,000. Assume the tax rate is 30
percent and the required return on the project is 6 percent.
Required:
What is the project’s NPV? (Do not include...

Keiper, Inc., is considering a new three-year expansion project
that requires an initial fixed asset investment of $2.91 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 $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...

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...

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 $2.38
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 $1,805,000 in
annual sales, with costs of $715,000. The tax rate is 24 percent
and the required return on the project is 12 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 $1,715,000 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 $1,715,000 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 $2.43
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 $1,990,000 in
annual sales, with costs of $685,000. The tax rate is 30 percent
and the required return on the project is 18 percent.
What is the project’s NPV?
(Enter your answer in dollars,...

Keiper, Inc., is considering a new three-year expansion project
that requires an initial fixed asset investment of $2.67 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 $2,070,000 in annual sales, with
costs of $765,000. The tax rate is 34 percent and the required
return on the project is 13 percent. What is the project’s NPV?
(Round your answer to 2...

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