Problem $2$:

Assume that you ars considering whether to invest in a project that will cost $$100,000$ in initial investment. Your company requires a rate of return of $10\%,$ and you expect inflation to remain relatively constant at $4\%.$ You anticipate a useful life of four years for the project and have projected future cash flows as follows:

Year $1$: $$20,000$

Year $2$: $$50,000$

Year $3$: $$50,000$

Year $4$: $$25,000$

Explain your recommendation based on the net present value.