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H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,490,000. 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 $2,280,000 in annual sales, with costs of $1,270,000. Assume the tax rate is 30 percent and the required return on the project is 8 percent. What is the project’s NPV?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92064371

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