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H. Cochran, Inc., is considering a new three-year expansionproject that requires an initial fixed asset investment of$2,400,000. The fixed asset will be depreciated straight-line tozero over its three-year tax life, after which time it will beworthless. The project is estimated to generate $2,530,000 inannual sales, with costs of $1,550,000. Assume the tax rate is 25percent and the required return on the project is 10 percent. Whatis the project’s NPV?
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