1.You-Bee Enterprises, Inc. is considering a new three-year expansion project with the relevant cash flows below.

Calculate the project's NPV and IRR. Should You-Bee accept or reject this project based on your calculations? Please use the Excel template provided to answer this problem.

The required return is 12%.

The tax rate is 21%.

The project requires an initial fixed asset investment of $2.32 million, and the fixed asset will have a market value of $180,000 at the end of the project (salvage value). The fixed asset falls into the three-year MACRS class. [This is the fixed asset part of the cash flow.]

The project is estimated to generate $1.735 million in annual sales, with costs of $650,000. [This is the OCF part of cash flow.]

The project requires an initial investment in net working capital of $250,000, which will be fully recovered at the end of the project. [This is the change in net working capital part of cash flow.