Question #5: Fontenot Seafood Company is thinking about building a new pier which will cost $280,000. Fontenot expects to get 5 years of use out of the pier, after which it will be sold for $150,000. Fontenot estimates that there will be annual cash flows of $55,000 resulting from the new pier. Fontenots borrowing rate is 8% and it cost of capital is 10%.

Required: Prepare an analysis to calculate the net present value of the pier and discuss whether this pier is a good investment for the Company.