1. (Chapter 9) After a few years of operation the James performance has far exceeded their expectations such that they are now considering a new three-year expansion project that will require an initial fixed asset investment of $1,950,000. 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 $2,145,000 in annual sales with costs of $1,205,000. If the tax rate is 21 percent, what is the OCF for this project?

2. (Chapter 9) In the previous problem suppose the James view this expansion as riskier than the initial investment, they decided they require a return on the project of 12 percent. What is the projects NPV at 12%.