3. A project has the following characteristics:

Initial investment is $1,700,000

Initial investment is depreciated to $0 over its 10 year life

Project generates incremental after-tax cash flows (OCF) of $325,000 per year over the projects life

Project requires a net working capital (NWC) investment today of $50,000, which is recovered at the end of the project

Assets purchased with the initial investment are expected to have a salvage value of $74,000 at the end of the project

The firm faces a 28% tax rate

The firm requires an effective annual return of 12% on this investment.