James Denning wants to buy a caravan rental business in the inner Melbourne suburb of Richmond. James spends $1500000 on the purchase of the business including caravans and further advertising and signage costs amount to $122000. He thinks he can net $395000 each year after all costs are paid. He will work in the business and not take a salary. After five years of this venture, he aims to sell the business and the caravans. To be conservative, he allows only $300000 as the amount recouped.

Required
(a) What is the PP for the caravan venture?
(b) If James allows $85000 as his own wage in his calculations and he could earn 10 per cent elsewhere on his funds, what is the NPV for the project?
(c) In your own words, what does this NPV tell us?