A store will cost $900,000 to open. Variable costs will be 57% of sales and fixed costs are $130,000 per year. The investment costs will be depreciated straight-line over the 6 year life of the store to a salvage value of zero. The opportunity cost of capital is 6% and the tax rate is 40%.

Find the operating cash flow if sales revenue is $800,000 per year.

Using the operating cash flow from the answer above, what is the NPV of this project?

Finally, considering the value of the NPV, should the company accept or reject this project?