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

Cullumber 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 $336,000 each year for three years. If the discount rate is 17.5 percent, what is the NPV on this project? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.)

Expert Solution

Year	Cash flow	Present value of 1	Present value of cash flow
a	b	c=1.175^-a	d=b*c
0	$ -6,50,000	1.0000	$ -6,50,000
1	$ 3,36,000	0.8511	$ 2,85,957
2	$ 3,36,000	0.7243	$ 2,43,368
3	$ 3,36,000	0.6164	$ 2,07,122

NPV			$ 86,447

jeff jeffy answered 1 year ago

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