Rad Footwear is investigating a new line of athletic shoes. The company needs the present value of the future revenue stream to exceed $3 million at a discount rate of 5%. The annual revenue stream, starting one year from now, is as follows:
Years Revenues
1 .......................................350,000
2 .......................................420,000
3 .......................................550,000
4 .......................................510,000
5 .......................................430,000
6 .......................................390,000
7 .......................................330,000
8 .......................................250,000
Required:
Determine whether the new line of athletic shoes will achieve the company's goals. 5.9