They are interested in remodeling an existing vacant store at initial cost (t=0) of $95,000 and then paying $8,000 per year in rent and $38,000 in other annual expenses. Cash inflows are expected at $78,000 per year over the next five years. All Cash Flows except the $95,000 occur at the end of each year. Given a required return of 8.6% per year, is this a good deal?

No, the Net Present Value (NPV) is negative. Yes, the Net Present Value (NPV) is $27,771. Yes, the Net Present Value (NPV) is $30,771. No, the Discounted Payback Period is less than five years.