All future cash benefits will occur at the end of the year

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The Expresso Roast Corporation (ERC) is considering expanding its product lines. The company’s founder is obscenely wealthy and will operate these lines for only one year before retiring and will therefore use only a one-year planning horizon. The first candidate for acquisition is Quick-Roast Coffee, which has a cost of $75,000 and is expected to produce cash benefits of $80,000. A major government study may come out later on this year declaring coffee drinking a major health risk, so this is a risky investment and ERC’s CFO has recommended a risk premium of 15%.

All future cash benefits will occur at the end of the year. The rate of return on US T-Bills is 4%. Using NPV analysis, is this an acceptable investment? Do not enter "$" or comma: just enter the number of your answer.

Reference no: EM131298174

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