Bravo Pty Ltd is considering the addition of a new product line. The new product will require an initial capital outlay of $70 000 and is expected to have a five-year life cycle. The manager estimates that because of the new product, cash flow will increase over the next five years by the following amounts.

Year Increase

1 $20000

2 $25000

3 $24000

4 $18000

5 $15000

If Bravo's hurdle rate is 14 per cent, calculate the net present value of the new product line. (Income taxes can be ignored.)

$68 275

$71 406

$1406

$0