Reference no: EM133070308

Mark Stevens is considering opening a hobby and craft store. He would invest $50,000 to purchase equipment and furnishings and another $100,000 for inventories and other working capital needs. Rent on the building used by the business will be $25,000 per year. In addition to building rent, other annual cash out?ows for operating costs will amount to $44,000. Mark estimates that the annual cash in?ow from the business will amount to $100,000. Mark plans to operate the business for only six years. He estimates that the equipment and furnishings could be sold at that time for about 10% of its original cost. Mark's discount rate is 16%. All cash ?ows, except for the initial investment, would occur at the ends of the years. Reguired: Commute the net present value of this investment.