Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.38 million. The fixed asset qualifies for 100 percent bonus depreciation in the first year. The project is estimated to generate $1,760,000 in annual sales with costs of $660,000. The project requires an initial investment in net working capital of $350,000 and the fixed asset will have a market value of $330,000 at the end of the project.

a. if the tax rate is 25 percent, what is the projects year 0 net cash flow? year 1? year 2?

b. If the required return is 10 percent , what is the projects NPV?