The net present value (NPV) calculation for a project takes into account the expected cash flows from the project and discounts them back to their present value using the required return rate. Here's the high-level approach to calculate the NPV:

1. Calculate the annual after-tax cash flow.
2. Determine the present value of these cash flows.

Let's start with the annual after-tax cash flow calculation: - Year 1: Revenue - Costs = $1,725,000 (annual sales) - $635,000 (annual costs) = $1,090,000 - Tax savings from depreciation: $2,310,000 (total investment) / 3 years = $770,000/year - After-tax cash flow: $1,090,000 (before-tax cash flow) + $770,000 (tax savings) = $1,860,000

Now, we discount this annual after-tax cash flow by the required return of 12% to find the present value for each year and sum them up for the NPV:

NPV = Year 1 cash flow / (1 + required return)^1 + Year 2 cash flow / (1 + required return)^2 + ...

Given the information provided, we can calculate the NPV as follows:

NPV = ($1,860,000 / (1 + 0.12)^1 + ($1,860,000 / (1 + 0.12)^2 + ($1,860,000 / (1 + 0.12)^3

After performing the calculation, the NPV would be approximately $4,410,000. However, since the question asks for the answer rounded to two decimal places and in dollars, not millions of dollars, the NPV would be reported as $4,410,000.