What is the net present value of the following project

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What is the net present value of the following project proposal's estimated costs and benefits (show your work)?

The estimation period is 3 years and the risk-free interest rate is 3%. In the first year of the project, there will be an investment of $400,000 in computers and other infrastructure. In the third year, an additional investment of $100,000 will be made in an additional large computer.

Software licenses will cost $15,000 per year all three years. Salaries will cost $500,000 in year 1 and $80,000 each in years 2 and 3.

There will be no revenue in year 1. Year 2 revenue will be $550,000, and year 3 revenue will be $800,000. Based on your analysis, should this project be pursued?

Reference no: EM131876586

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