Champion Company is considering a contract that would require an expansion of its food processing capabilities. The contract covers five years. To provide the required products, Champion would have to purchase additional equipment for \($58,000.\) Champion estimates the contract will provide annual net cash inflows (before taxes) of \($21,000.\) For tax purposes, the equipment will be depreciated as follows:

Although salvage value is ignored in the tax depreciation calculations, Champion estimates the equipment will be sold for \($5,000\) after five years. Required Assuming a 35% income tax rate and a 10% hurdle rate, compute the net present value of this contract proposal. Using net present value analysis, should Champion accept the contract? (Round amounts to the nearest dollar.)

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Year 1. Year 2. Year 3. Year 4. Year 5. $ 8,000 16,000 16,000 10,000 8,000