Down Under Boomerang, Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $2.4 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which it will be worthless. The project is estimated to generate $2,050,000 in annual sales, with costs of $950,000. The tax rate is 35% and the required return is 12 percent.

a. Calculate the projects NPV and IRR.

b. Suppose that Down Under Boomerang is projected to grow at a rate of 4% after year 3. What is the value of the firm?