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A proposed new investment has projected sales of $35.000. Variable costs 55 percent of sales and feed costs are $187.450, dep
H. Cochran, Inc., is considering a new three-year expansion project that requires and investment of $2.520 000 The fond asset
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Answer #1

question 1) calculation of netincome

sales 835,000.00
less variable costs 459,250
less fixed costs 187,450
less depreciation 96,000
PBT 92,300
less tax@30% 27,690
net income 119,990

net income is 119990

question 2)

depreciable value is 2520000

life is 3 years

depreciation = 2520000/3= 840000

OCF calculation

sales 2290000
less costs 1280000
less depreciation 840000
PBT 170000
less tax@40% 68000
PAT 102000
add depreciation 840000
OCF 942000

ocf is 942000

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