Compute the net present value of the investment

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Mark Stevens is considering opening a hobby and craft store. He would need $50000 to equip the business and another $100000 for inventories and other working capital needs. Rent on the building used by the business will be $25000 per year. Mark estimates that the annual cash inflow from the business will amount to $100000. In addition to building rent, other annual cash outflows for operating costs will amount $44000. Mark plans to operate the business for only 6 years. He estimates that the equipment and furnishings could be sold at that time for about 10% of its original cost. Mark requires a 16% return on this investment.
Required:
Compute the net present value of this investment.

Reference no: EM13215525

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