Question

Skyline Music is considering investing $750,000 in private lesson studios that will have no residual value. The studios are expected to result in annual net cash inflows of $100,000 per year for the next 10 years. Assuming that Skyline Music uses an 8% hurdle rate, what is net present value (NPV) of the studio investment? Is this a favourable investment?


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  • CreatedApril 30, 2015
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