Sandhill Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that...

Sandhill Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that this action will result in additional cash flows of $343,000 each year for three years. If the discount rate is 17.5 percent, what is the NPV on this project?

Expert Solution

NPV = -Initial investment + Present value of cash flows

NPV = -$650,000 + $343,000/1.175 + $343,000/1.175^2 + $343,000/1.175^3

NPV = $101,789.87

jeff jeffy answered 2 years ago

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