Question: A store is considering carrying a new product which will require an upfront purchase of $125,000 for inventory. Free cash flows expected as a result

A store is considering carrying a new product which will require an upfront purchase of $125,000 for inventory. Free cash flows expected as a result of this project are shown below. At the end of the final year shown, the company plans to stop selling this product and sell off the excess inventory to a discount retailer for $5,000. The company has a 12% cost of capital (i.e., the required rate of return is 12%). What is the net present value of this proposal?

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Initial Investment 60,000 40,000 30,000 20,000 10,000

Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234 If you have a negative result, enter a negative number.

A company is considering a new line which will require an initial investment of $300,000. Free cash flows expected as a result of this project are shown below. At the end of the final year shown, the company plans to sell off assets no longer needed by the project, netting $20,000 after tax. The company has a 15% cost of capital (i.e., the required rate of return is 15%).

What is the net present value of this proposal?

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Initial Investment 80,000 85,000 90,000 95,000 100,000

Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234 If you have a negative result, enter a negative number.

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