Question: Lily, a sole trader, is considering a project A which requires an initial investment of $855 (i.e t=0). The project is expected to generate permanent

Lily, a sole trader, is considering a project A which requires an initial investment of $855 (i.e t=0). The project is expected to generate permanent sales of $1239 per year from year 1. Costs are $585 for the first year (i.e t=1) and will increase by 21% per year over the subsequent 3 years. Ignore taxes and calculate the NPV of the project at a 13% cost of capital (round your answer to two decimal places)

The correct answer is 6375.

Please show working and explain why the correct answer is 6375.

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