1. Firm AAA is considering a new three-year new project that requires an initial fixed asset investment of $2.28 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 $2,120,000 in annual sales, with costs of $745,000. The project requires an initial investment in net working capital of $260,000, and the fixed asset will have a market value of $280,000 at the end of the project.

1. If the tax rate is 35 percent, what is the projects year 0 net cash flow? And what are the free cash flow at Year 1? Year 2? Year 3
2. Should the firm accept the project if the required return rate is 15%? Why? Please show your calculation in details.