1. A firm is evaluating a new project that requires an initial investment of $1 million. The asset will be depreciated to 0 over its three year life. The firm estimates the project will generate $900,000 in revenue and $375,000 in costs. The corporate tax rate is 22% and the required return is 12%. What is the NPV?

a.) What is the NPV if the project requires an investment in Net Working Capital of $200,000 at t = 0?

b.) What is the NPV is the salvage value of the asset will be $90,000 at the end of the project?

c.) Using the information in parts A and B of the question, re-estimate the project's NPV if the asset will be depreciated using the 3-year MACRS class.