A company is considering a 3-year investment project and will use a cost of capital of 10% p.a. to evaluate it. The project will cost $180,000 upfront (year 0) and the company's corporate tax rate is 30%. The project team has prepared the following incremental cash flow projections for this project.

 

Calculate the project's net present value.

Sales revenues Year 1 $400,000 Year 2 $400,000 Year 3 $400,000 Cost of goods sold (70% of revenues) $280,000 $280,000 $280,000 Depreciation expense $60,000 $60,000 $60,000 Change in net working capital +$15,000 +$15,000 -$30,000