Summer Tyme, inc., is considering a new three year expansion project that requires an initial fixed asset investment of $3.9 million. The fixed asset will be depreciated straight line to zero over the life of the project, after which time it will be worthless. The project is estimated to generate $2650000 in annual sales, with costs of $840000 and a tax rate of 35 percent. The required return on the project is 12 percent.

a) What is the operating cash flow (OCF) for this project?

b) What is the projects NPV?

c) Suppose the project requires an initial investment in net working capital of $300000,

and the fixed asset will have a market value of $210000 at the end of the project. What is the projects new NPV?