A potential project with is expected to generate the following revenue per annum for the next 6 years with an after-tax operating cash flows equal to 20% of Revenue (prior to consideration of working capital) from new business with a government agency.

Year 1 $600,000 Year 4 700,000

Year 2 650,000 Year 5 700,000

Year 3 675,000 Year 6 650,000

The project will have an initial outlay of $450,000. The firm uses a cost of capital of 11%. What is the NPV of the project?

b) Now consider, the government agency is expected to be a slow pay with an A/R of 175 days. What is the revised NPV of the project?