Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.886 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $457,800. The project requires an initial investment in net working capital of $654,000. The project is estimated to generate $5,232,000 in annual sales, with costs of $2,092,800. The tax rate is 31 percent and the required return on the project is 17 percent.
What is the NPV? What is the net cash flows of years 0, 1, 2, and 3 ?