Gamble, Inc. is considering a very risky new three-year expansion project requiring a fixed asset investment of $906,000. The fixed asset will be depreciated straight-line to zero over its three-year life, after which will be worthless. The project is estimated to generate $999,000 in annual sales, with costs of $555,000. The tax rate is 21% and the required return for this project is 18%.

1a. Using the tax shield approach what is the OCF for this project?

1b. What is the NPV? Should the project be accepted?