Calculating Project OCF. H. Cochran Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $1,950,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,145,000 in annual sales, with costs of $1,205,000. If the tax rate is 35 percent, what is the OCF for this project?

Now Calculate the Project NPV: In the problem above, suppose the required return on the project is 14 percent. What is the projects NPV?