Famous Music is considering investing $800,000 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 ten years. Assuming that Famous Music uses a 12% hurdle rate, what is the net present value (NPV) of the studio investment? Is this a favorable investment? (Click the icon to view the present value of an annuity table.) (Click the icon to view the present value table) (Click the icon to view the future value of an annuity table.) (Click the icon to view the future value table) The NPV (net present value) is the difference between the present value of the investment's net cash inflows and the investment's initial cost. We discount the net cash inflows to their present value, using a minimum desired rate of return This rate is called the discount rate because it is the interest rate used for the present value calculations. It's also called the required rate of return or hurdle rate because the investment must meet or exceed this rate to be acceptable. The discount rate depends primarily on the riskiness of investments. The higher the risk, the higher the discount rate. Calculate the present value of the annuity then reduce the present value by the initial cost of the investment to determine the net present value (Round your answers to the nearest whole dollar Use parentheses or a minus sign for a negative net present value) Calculate the present value of the annuity, then reduce the present value by the initial cost of the investment to determine the net present value. (Round your answers to the nearest whole dollar Use parentheses or a minus sign for a negative not present value) Annuity PV factor at Annual net Total present I=12%, n=10 cash inflow value Present value of annuity of equal annual nel cash inflows YI Present value of annuity of equal annual net cash inflows = Less: Investment Net present value