Question
Organic Soup Creations is considering making an investment in a new factory. The investment will cost the company $934,553 now. The factory will not generate
Organic Soup Creations is considering making an investment in a new factory. The investment will cost the company $934,553 now. The factory will not generate any cash flow for the first year since it will be under construction. At the end of year 2, the investment will generate a cash flow of $226,540; at the end of year 3, $276,897; at the end of year 4, $303,363 and at the end of year 5, it will have a useful value of $50,000 that grows at 1.0% per year indefinitely. The project costs $934,553 and the discount rate that represents the riskiness of the project is 6.8% per year.
If the company decides to borrow the money and invest in this factory, what will be the net present value of this investment? (Round your answer to nearest whole number)
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