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

Vernon Company has been offered a seven-year contract to supply a part for the military.After careful study,the company has estimated the following data relating to the contract:
$\begin{array}{|l|r|}\hline \text { Cost of equipment needed } & \$ 300,000 \\\hline \text { Working capital needed } & \$ 50,000 \\\hline \text { Annual cash receipts from the delivery of parts, less cash operating costs } & \$ 70,000 \\\hline \text { Salvage value of equipment at termination of the contract } & \$ 5,000 \\\hline\end{array}$
It is not expected that the contract would be extended beyond the initial contract period.The company's discount rate is 10%.(Ignore income taxes in this problem.)
Required:
Use the net present value method to determine if the contract should be accepted.Round all computations to the nearest dollar.