Jane is a project manager for Jackson Drinks Inc. She is evaluating the feasibility of project to construct a plant to produce a new health drink. She has the following information.

Sales of 500,000 bottles/year with a price of $6/bottle.

Variable cost per bottle is $3 per bottle.

Fixed costs are $500,000 per year.

Project life is 5 years.

Initial Investment (cash outlay) is $2,000,000.

Depreciation is $400,000/year.

Additional net working capital of $1,000,000 required. Same for all periods.

The firms required return is 16%.

The tax rate is 30%.

a. What is the OCF in year 1 to year 5?

b. What is the (Free) Cash Flow in year 1 to year 5?

c. What is the NPV of the project? Should Jackson Drinks Inc. accept or reject the project?