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 company’s 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: Sales $3,400,000
Variable expenses 1,600,000
Contribution margin 1,800,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs $680,000
Depreciation 660,000
Total fixed expenses 1,340,000
Operating income $460,000

Required:
Compute the project's net present value.