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.

Answer rating: 100% (QA)

Case 1 Net Present Value of New Product Step 1 Calculate the present value of each cash flow Year Cash Flow Discount Factor 11 012t Present Value 0 12... View the full answer