Riggs Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that...

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Riggs Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that this action will result i

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Answer 1

Answer #1

Ans : NPV = $ 38,227.46

NPV
Year	Present value factor =1/(1+r)^n	Present value factor	Net Cash flows (inflows-outflows)	Present value of cash flows
1	1/(1+17.5%)	0.8511	314000	267234.04
2	1/(1+17.5%)^2	0.7243	314000	227433.23
3	1/(1+17.5%)^3	0.6164	314000	193560.19
			Present value of cash inflows	688227.46
			Less: Initial outflow	650000
			NPV	38227.46

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Answer 2

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