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MSI has been researching an additional investment opportunity, codenamed Hypnos. This project would see MSI expanding its product offerings into office furniture, specifically high -

MSI has been researching an additional investment opportunity, codenamed Hypnos. This project would see MSI expanding its product offerings into office furniture, specifically high-end office chairs. The firm estimates that the initial costs required to design and produce its new line of office chairs to be $15.75 mln. It is estimated that the new product line will generate new cash inflows of $2.50 mln in the first year. Cash inflows are anticipated to increase by 3.75% annually until year eight. However, management believes that their success will generate increased competition in the office furniture segment. As such, management believes that cash inflows will begin to decline in year nine at an annual rate of 2.65%. Management forecast that increased competition and declining profitability will result in the firm exiting the office furniture market in eighteen years. Determine the NPV of Hypnos.

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