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What is the net present value of the investment

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X Company is considering conducting an immediate advertising campaign in order to increase sales of one of its more popular products. The marketing department did market research last year that suggested the company could sell 5,000 more units of this product; the cost of this research was $10,400.

The cost of the advertising campaign would be $48,500. The product's contribution margin is $14.00 per unit; additional annual fixed costs would be $17,000. The increased sales are expected to last for 4 years.

Problem 1: Assuming a discount rate of 5%, what is the net present value of this investment?

Reference no: EM132781163

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