Gaston Company is considering a capital budgeting project that would require a $2,900,000 investment in equipment with a useful life of five years and no salvage value. The companys tax rate is 30% and its after-tax cost of capital is 16%. It uses the straight-line depreciation method for financial reporting and tax purposes. The project would provide net operating income each year for five years as follows:

Gaston Company is considering a capital budgeting project that would require a $2,900,000 investment in equipment with a useful life of five years and no salvage value. The company's tax rate is 30% and its after-tax cost of capital is 16%. It uses the straight-line depreciation method for financial reporting and tax purposes. The project would provide net operating income each year for five years as follows: Sales Variable expenses Contribution marain $3,500,000 1,810,000 1,690,000 Fixed expenses: Advertising, salaries, and other fixed s570,000 out-of-pocket costs 580,000 Depreciation Total fixed expenses Net operating income 1,150,000 540,000 Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables Required Compute the project's net present value Net present value