Should company undertake the revision

Reference no: EM131978874

Question: Growing Annuity Southern California Publishing Company is trying to decide whether to revise its popular textbook. Financial Psychoanalysis Made Simple. The company has estimated that the revision will cost $135,000. Cash flows from increased sales will be $48,000 the first year. These cash flows will increase by 4 percent per year. The book will go out of print five years from now. Assume that the initial cost is paid now and revenues are received at the end of each year. If the company requires a return of 10 percent for such an investment, should it undertake the revision?

Reference no: EM131978874

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