5) A firm is considering a five-year expansion project to take advantage of a higher demand for the product. The project requires an initial investment in fixed assets of $8,000,000, which will be depreciated straight-line to zero over the five-year project life. The expected operating cash flow (OCF) for each year over the five-year life of the project is provided below.

Year	Expected operating cash flow (OCF)*
1	$3,000,000
2	$5,000,000
3	$4,000,000
4	$4,000,000
5	$3,000,000

*Defined as net income + depreciation expense.

The firm expects to have a before-tax salvage value of $2,000,000 at the end of the project. It also needs an initial net working capital investment of $1,000,000. The entire net working capital investment will be recouped at the end of project. The tax rate is 40 percent.

The company's capital structure consists of 30 percent debt and 70 percent equity/. The firm has a before-tax cost of debt (i.e., yield to maturity) of 7 percent per year and a levered equity beta of 1.30. The annual risk-free and market risk premium are 5 percent and 6 percent respectively. Assume that the project has the same capital structure and the same risk firm overall. Find the net present value (NPV) of the project.