Gaston Company is considering a capital budgeting project that would require a $2,400,000 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 13%. 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:

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

Compute the projects net present value. (Round discount factor(s) to 3 decimal places.)

Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $690,000 480,000 $3,100,000 1,630,000 1,470,000 1,170,000 300,000