## (Solution Download) An asset used in a four-year project falls in the five-year MACRS class (MACRS Table) for tax purpos

 An asset used in a four-year project falls in the five-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of \$7,500,000 and will be sold for \$1,790,000 at the end of the project.

 Required: If the tax rate is 34 percent, what is the aftertax salvage value of the asset? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

 Aftertax salvage value \$

table:

http://lectures.mhhe.com/connect/0073382469/Images/macrs_table.jpg

 Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of \$2,520,000. 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 \$2,290,000 in annual sales, with costs of \$1,280,000. Assume the tax rate is 40 percent and the required return on the project is 7 percent.

 Required: What is the projectAc??cs NPV? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567). Round your answer to 2 decimal places (e.g., 32.16).)

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