H. Cochran Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.34 million. The fixed asset qualifies for 100 percent bonus depreciation in the first year. The project is estimated to generate $1,740,000 in annual sales, with costs of $644,000. The project requires an initial investment in net working capital of $310,000, and the fixed asset will have a market value of $270,000 at the end of the project. a. If the tax rate is 22 percent, what is the project's Year O net cash flow, Year 1, Year 2, Year 3?
b. If the required return is 9 percent, what is the project's NPV?