Cochran, Inc. is considering a new 3 year expansion project with initial costs of $1,000,000. Additionally, the project also requires equipment that will cost $2,250,000 and will be depreciated straight-line to zero over its 3 year tax life, after which time it will be worthless. The project requires an additional $150,000 of working capital to get started, which it will receive back at the end. The project is estimated to generate $3,000,000 in annual sales, with costs of $1,370,000. The tax rate is 22% and the discount rate is 15%.

What is the total initial cost?

What is the OCF?

What is the NPV and should the project be accepted?