Vernal Company Has Been Offered a Seven-Year Contract to Supply

Vernal Company has been offered a seven-year contract to supply a part for the military.After careful study,the company has developed the following estimated data relating to the contract:


$\begin{array}{lccc}\text { Cost of Equipment Needed } & \$ 300,000 \\\text { Working Capital Needed to Carry Inventories } & \$ 50,000 \\\text { Annual Net Cash Inflow } & \$ 90,000 \\\text { Salvage Value of Equipment } & \$ 10,000\end{array}$

The equipment above would be in Class 7 with a 15% CCA rate. The company would take the maximum CCA allowable each year. It is not expected that the contract would be extended beyond the initial contract period. The company's after-tax cost of capital is 10%, and the tax rate is 30%.

Required:

Use net present value analysis to determine whether or not the contract should be accepted. (Round all calculations to the nearest dollar.)