Johnson is considering building a new plant to support its expanding business. The plant would require an initial outlay of $4.5 million for fixed assets and $1 million for net working capital. Johnson expects the expansion to increase annual operating cash flows to the company by $1.5 million for 6 years.

a. Determine the project NPV if the cost of capital is 15%.

b. Briefly explain - without using the term NPV - why Johnson should - or should not move forward with this expansion.