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Intrepid Design Studio has estimated that the new outdoor clothing line will require an initial investment of $40,000 in equipment, workstations, materials, promotion, staff training
Intrepid Design Studio has estimated that the new outdoor clothing line will require an initial investment of $40,000 in equipment, workstations, materials, promotion, staff training and web development. The clothing line is expected to increase annual profits by $10,000 for the first 4 years and $5,000 for the next 4 years. There will be no significant recoverable amounts at the end of the 8 years. Before analysing this venture in more detail, suggest that its net present value be determined.
- find that for entrepreneurial businesses similar to Intrepid Design Studio, the cost of capital is 12% per year compounded annually. EXCEL will be used to calculate the net present value of the proposed investment in the new outdoor clothing line. Assume that increases in annual profits are realised at the end of each year. Include a copy of your spreadsheet results.
- set up the spreadsheet-like above pic
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