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Sainsbury is considering a new three-year expansion project that requires an initial fixed asset investment of $5.9 million. The fixed asset will be depreciated straight-line

Sainsbury is considering a new three-year expansion project that requires an initial fixed asset investment of $5.9 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 $2,650,000 in annual sales, with costs of $740,000. A. If the tax rate is 35%, what is the OCF for this project? B. Suppose the required rate of return on the project is 20%, what is the projects NPV?

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