The firm is evaluating an expansion project. The projected cash flows and other data are shown in the table:

Project Data
Project life	3 years
Unit sales (per year)	1,200
Price (per unit)	50.00
Variable cost (per unit)	20.00
Fixed cost (per year)	3,000
Fixed capital investments	90,000
Fixed assets are depreciated straight-line over 3 years to book value of zero
Net working capital investments	15,000
Salvage value of fixed assets at the end of three years	10,000
Marginal tax rate	15%
Cost of capital	20%

1. Assuming that fixed capital investments and working capital investments are made at the start of the project, what is the initial cash outlay?

2. Determine the after-tax operating cash flows.

3. Assuming the recovery of the net working capital investment and the sale of fixed assets at the end of the projects life, calculate the terminal non-operating cash flow.

4. Calculate the net present value. Should the firm accept or reject the project?