Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,640,000. The fixed asset falls into the three-year MACRS class (MACRS Table). The project is estimated to generate $2,330,000 in annual sales, with costs of $1,320,000. The project requires an initial investment in net working capital of $168,000, and the fixed asset will have a market value of $193,000 at the end of the project. Assume that the tax rate is 35 percent and the required return on the project is 6 percent.
Requirement 1:
What is the net cash flow of the project for the following years?
Year Cash Flow
0 -2,808,000$
1 964469.2
2 1067218
3
I am able to get 0-2 correct, but not 3.
Requirement 2:
What is the NPV of the project?
NPV $