Munyon Music is considering investing $675,000 in private lesson studios that will have no residual value. The

Question:

Munyon Music is considering investing $675,000 in private lesson studios that will have no residual value. The studios are expected to result in annual net cash inflows of $100,000 per year for the next nine years. Assuming that Munyon Music uses an 8% hurdle rate, what is (NPV) of the studio investment? Is this a favorable investment?
Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...