Esfandiari Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.46 million. 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 $2,000,000 in annual sales, with costs of $695,000. The project requires an initial investment in net working capital of $220,000 and the fixed asset will have a market value of $300,000 at the end of the project.

If the tax rate is 25 percent, what is the projects Year 1 net cash flow? Year 2? Year 3?

Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.

If the required return is 9 percent, what is the project's NPV?

Note: Enter your answer in dollars, not millions of dollars. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 1,234,567.89.

\begin{tabular}{|l|} \hline a. Year 0 cash flow \\ \hline Year 1 cash flow \\ \hline Year 2 cash flow \\ \hline Year 3 cash flow \\ \hline b. NPV \\ \hline \end{tabular} \begin{tabular}{|l|} \hline a. Year 0 cash flow \\ \hline Year 1 cash flow \\ \hline Year 2 cash flow \\ \hline Year 3 cash flow \\ \hline b. NPV \\ \hline \end{tabular}