Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.9 million. The company has invested $100,000 (nonrefundable) in R&D before the project. The fixed asset will be depreciated on a 3-year MACRS schedule. The MACRS percentages for year 1-4 are 33.33, 44.45, 14.81, and 7.41, respectively. The project is estimated to generate $2,737,500 in annual sales, but 20% of the sales comes from a decrease of sales in existing products. Annual costs of project is estimated as $815,000. The project requires an initial investment in net working capital of $300,000, along with an additional $100,000 in NWC for each succeeding year of the project. The fixed asset will have a market value of $210,000 at the end of the project. The manager has decided to issue debt to fund this project. Annual interests are estimated as 100,000. The tax rate is 21% and the required return is 12%.

What is the projects Year 3 net cash flow?

What is the NPV of this project?