Question: I need help with number 11 and 12 PART 5 Capital Budgeting considering a new th LO2 9. Calculating Project OCF. H. Cochran, Inc., is
PART 5 Capital Budgeting considering a new th LO2 9. Calculating Project OCF. H. Cochran, Inc., is c LO 2 expansion project that requires an initial fixed asset investme of 1,950,000. The fixed asset will be depreciated straight-line t LO three-year tax life, after which time it will be worthless.o over eprojectis estimated to generate $2,145,000 in annual sales, withostsf If the tax rate is 35 percent, what is the OCF for this project? LO 2 10. Calculating Project NPV. In the previous problem, suppose the re LO2 required return on the project is 14 percent. What is the project's NPV 11. Calculating Project Cash Flow from Assets. In the previous problem suppose the project requires an initial investment in net working capital d $150,000, and the fixed asset will have a market value of $175,000 at the end of the project. What is the project's Year 0 net cash flow? Year 1? Ye 2 2? Year 3? What is the new NPV? 12. NPV and Modified ACRS. In the previous problem, suppose the fixed an actually falls into the three-year MACRS class. All the other facts are the same. What is the project's Year 1 net cash flow now? Year 2? Year 3 LO 2 What is the new NPV
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