A company operating in the insurance industry is considering whether to diversify by investing in a project in the transport industry.

The company has a gearing ratio of 30% debt and 70% equity, and its equity beta is 0.940. Its debt capital is risk-free.

The transport industry has an average equity beta of 1.362, and firms in the transport industry on average have a gearing ratio of 40% debt to 60% equity.

The risk-free rate of return is 5.3% and the expected market return is 8.3%.

The rate of taxation on profits is 23%.

The cash flows of the project after tax will be:

Year 0 $(600,000)

Years 13 $250,000

Required

Calculate the base case (all equity financed) NPV.