Diane Manufacturing Company is considering investing $500,000 in new equipment with an estimated useful life of 10 years and no salvage value. The equipment is expected to produce $320,000 in cash inflows and $200,000 in cash outflows annually. The company uses straight-line depreciation, and has a 30% tax rate. Diane Manufacturing desired rate of return on this project is 10%.

Calculate the Net Present Value:

Net cash flows for years 1 through 10

(99,000 X present value of $1 annuity

factor)round to nearest dollar ________________________

Recovery of investment in working

capital (500,000 x (present value of $1 factor) ________________________

Present Value of net cash flows _______________________

Initial cash outlay 500,000

Net Present Value __________________________