Net Present Value Analysis for New Facility

An orgazezzation is considering a new retail facility and is convinced the facility will be profitable due to

demographic data obtained and analyzed by the marketing team. As an operations manager, you have

been asked to compute the net present value $($NPV$)$ based on the marketing team's acquisition and cash

flow projections.

Facility Acquisition in Year $0$: $$875,000$

Weighted Average Cost of Capital $($WACC$)$: $8\mathrm{.}5\%$

Cash Flow in Year $1$: $$155,000$

Cash Flow in Years $2-8$: $10\%>$ Prior Year

Calculate the NPV$*$ and determine if the facility meets the organization's threshold for acceptance as

defined by the NPV metric.