Review Problem $17$ #$4($LO$1)$

The development of a new product will require the expenditure of $$175,000$ at the beginning of each of the next two years. When the product reaches the market in Year $3,$ it is expected to increase the firm's annual profit by $$50,000$ for eight years. $($Assume that the profit is received at the end of each year.$)$ Then $$75,000$ of the original expenditures should be recoverable.

If the firm's cost of capital is $8\%,$ should it proceed with the project?

The firm proceed with the project.