What is the net present value-advertising campaign costing

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X Company is planning to launch a new product. Market research, costing $110,000, has been done and indicates that the product will be successful for five years, but to insure success, the company plans to undertake an immediate advertising campaign costing an additional $110,000. New manufacturing equipment will have to be purchased - it will cost $400,000 and have a salvage value of $20,000. It is expected that profits from sales of the product will be $175,000 in each of the first three years and $105,000 in each of the last two years. If X Company goes ahead with this product, what is the net present value (use a discount rate of 5%)?

Reference no: EM13774518

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