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H. Cochran Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $

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Answer #1
Year 0 Year 1 Year 2 Year 3
Fixed assets Investment -2370000
Investment in Working Capital -340000
Annual Sales 1755000 1755000 1755000
Costs -656000 -656000 -656000
Depreciation -789921 -1053465 -350997
Income before tax 309079 45535 748003
Less: Tax 74178.96 10928.4 179520.72
Net Income 234900.04 34606.6 568482.28
Add: Depreciation 789921 1053465 350997
Operating Cash flow 1024821.04 1088071.6 919479.28
Recovery of working capital 340000
After tax salvage value 281548.08
Cash flow -2710000 1024821.04 1088071.6 1541027.36
PVF 1 0.91743119 0.84168 0.77218348
PV -2710000 940202.789 915808.1 1189955.87
NPV 335967
WDV 175617
Selling Price 315000
Gain 139383
Tax 33451.9
After tax salvage value 281548
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