A company invests $5 million in a solar panel manufacturing line in year 0 and obtains revenues as follows:

Year 1 = $4 million

Year 2 = $5 m

Year 3 = $8 m

The variable margin for revenues associated with this investment will be 70% of revenue. Total fixed costs including SG&A are $1 million/year. Assume a 5-year useful life for the fixed assets, a 30% tax rate.

What is the net present value (NPV) of the total annual cash flows at a 4% discount rate at the end of the 3^rd year of operation?

What is the accounting return on investment (ROI) for each of the first 3 years of operation?