A-tonic, Inc., is considering an investment of $420,000 in an asset to be used in a project with a five-year life. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $246,800 and $82,000, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 3 percent. For income tax purposes, the company will use the straight-line method to depreciate its asset to zero over six years, not five. However, the salvage value of the asset is estimated to be $45,000 at the end of the project. A one-time net working capital investment of $15,000 is required immediately and will be fully recovered at the end of the project.

The companys average income tax rate is 34 percent, it marginal income tax rate is 40 percent and its real cost of capital, or minimum acceptable rate of return, is 10 percent.

Required: Determine the projects net present value.