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H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,310,000. 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 $2,220,000 in annual sales, with costs of $1,210,000. Assume the tax rate is 30 percent and the required return on the project is 11 percent.

What is the project’s NPV?

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Irving Heathcote
Irving HeathcoteLv2
28 Sep 2019

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H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,310,000. 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 $2,220,000 in annual sales, with costs of $1,210,000. Assume the tax rate is 30 percent and the required return on the project is 11 percent. What is the project’s NPV?

Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,310,000. 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 $2,220,000 in annual sales, with costs of $1,210,000. Assume the tax rate is 30 percent and the required return on the project is 11 percent. Required: What is the project’s NPV? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567). Round your answer to 2 decimal places (e.g., 32.16).)

How can i figure this out in excel?


Cochrane, Inc., is considering a new three-year expansion projectthat requires an initial fixed asset investment of $2.31 million.The fixed asset will be depreciated straight-line to zero over itsthree-year tax life, after which time it will be worthless. Theproject is estimated to generate $2,220,000 in annual sales, withcosts of $1,210,000. The project requires an initial investment innet working capital of $157,000, and the fixed asset will have amarket value of $182,000 at the end of the project. Assume that thetax rate is 30 percent and the required return on the project is 11percent.


What are the net cash flows of the project for the followingyears?

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