Need to find what is the Net Present Value

Dungan Corporation is evaluating a proposal to purchase a new drill press to replace a less efficient machine presently in use. The cost of the new equipment at time 0, including delivery and installation, is $235,000. If it is purchased, Dungan will incur costs of $6,400 to remove the present equipment and revamp its facilities. This $6,400 is tax deductible at time 0.

Depreciation for tax purposes will be allowed as follows: year 1, $54,000; year 2, $84,000; and in each of years 3 through 5, $44,000 per year. The existing equipment has a book and tax value of $114,000 and a remaining useful life of 10 years. However, the existing equipment can be sold for only $54,000 and is being depreciated for book and tax purposes using the straight-line method over its actual life.

Management has provided you with the following comparative manufacturing cost data.

	Present Equipment			New Equipment
Annual capacity (units)		414,000			414,000
Annual costs:
Labor	$	47,500		$	39,000
Depreciation		24,000			28,000
Other (all cash)		62,000			34,000
Total annual costs	$	102,000		$	73,000

The existing equipment is expected to have a salvage value equal to its removal costs at the end of 10 years. The new equipment is expected to have a salvage value of $74,000 at the end of 10 years, which will be taxable, and no removal costs. No changes in working capital are required with the purchase of the new equipment. The sales force does not expect any changes in the volume of sales over the next 10 years. The companys cost of capital is 16 percent, and its tax rate is 25 percent.

I have compute correctly:

a. Equipment removal net of tax effects $4,800

b. Depreciation tax shield $67,500

c. Forgone tax benefits $2,850

d. Gain from salvage of new equipment $55,500

e. Tax benefit arising from loss on old equipment $15,000

f. Differential cash flows $27,375

But can't find the correct NPV