Your company has also been informed of the progress of a new innovation - TechnoRail, which is expected to be available in 5 years. The following estimates of costs etc. per TechnoRail have been provided:

TechnoRail	Estimates
Cost	$	673500
Estimated life		15	years
Estimated disposal value:
After 5 years operation	$	221000
After 15 years operation	$	60500
Annual net cash flows	$	281500

It is considered that two of the new TechnoRail will be adequate to carry the estimated number of passengers. Other information is as follows:

Your company cannot foresee any further developments beyond the TechnoRail.

The annual net cash flows are received at the end of each year.

The companys required rate of return is 8 per cent per annum. Ignore taxes.

What is the NPV if the firm replaces the ExpressT3 with SuperRailX now, and replaces the latter with TechnoRail in 10 years time. TechnoRail is replaced by TechnoRail always at the end of its useful life.

Net present value

$