# Question

Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.7 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 $2,450,000 in annual sales, with costs of $1,180,000. If the tax rate is 35 percent, what is the OCF for this project?

## Answer to relevant Questions

In the previous problem, suppose the required return on the project is 14 percent. What is the project’s NPV?In the previous problem, suppose your required return on the project is 20 percent and your pretax cost savings are $340,000 per year. Will you accept the project? What if the pretax cost savings are only $280,000 per year?You are considering a new product launch. The project will cost $890,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 190 units per year; price per unit ...ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with seven years to maturity that is quoted at 93 percent of face value. The issue makes semiannual payments and has an ...Given the following information for Janicek Power Co., find the WACC. Assume the company’s tax rate is 35 percent.Debt: 6,500 8.5 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 104 ...Post your question

0