Annual depreciation=(Cost-Salvage value)/Useful Life
=(2,760,000/3)=$920,000/year
Annual OCF=(Sales-Costs)(1-tax rate)+Tax savings on Annual depreciation
=(2,100,000-795,000)(1-0.34)+(0.34*920,000)
=$1174100
Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
=1174100[1-(1.12)^-3]/0.12
=1174100*2.40183127
=2819990.09
NPV=Present value of inflows-Present value of outflows
=2819990.09-2,760,000
=$59990.09(Approx).
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