Summer tyme inc is considering a new three-year expansion, Ask an Expert

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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 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 $840,000. If the tax rate is 35%, what is the OCF for this project?

If the required return on the project is 12%, what is the project's NPV?

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