Summer Tyme, Inc., is considering the new three-year growth project which requires the initial fixed asset investment of $3.9 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be insignificant. The project is estimated to generate $2,650,000 in annual sales, with costs of $840,000. When the tax rate is 35%, what is the OCF for this project?
If the required return on project is 12%, what is project’s NPV?