X Company is considering conducting an immediate advertising campaign in order to increase sales of one of its more popular products. The marketing department did market research last year that suggested the company could sell 6,000 more units of this product; the cost of this research was $12,500. The cost of the advertising campaign would be $51,900. The product's contribution margin is $15.00 per unit; additional annual fixed costs would be $11,000. The increased sales are expected to last for 5 years. Assuming a discount rate of 6%, what is the net present value of this investment? Table 1: Present Value of $1.00 6% 8% 9% Period 4% 1% 2% 1 0.962 2 3 4 0.980 0.961 0.942 0.924 0.906 5 6 0.888 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 7 7% 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 5% 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 10% 11% 12% 13% 14% 15% 0.909 0.901 0.893 0.885 0.877 0.870 0.826 0.812 0.797 0.783 0.769 0.756 0.751 0.731 0.712 0.693 0.675 0.658 0.683 0.659 0.636 0.613 0.592 0.572 0.621 0.593 0.567 0.543 0.519 0.497 0.564 0.535 0.507 0.480 0.456 0.432 0.513 0.482 0.452 0.423 0.400 0.376 0.467 0.434 0.404 0.376 0.351 0.327 0.424 0.391 0.361 0.333 0.308 0.284 0.386 0.352 0.322 0.295 0.270 0.247 0.350 0.317 0.287 0.261 0.237 0.215 0.319 0.257 0.231 0.208 0.187 0.290 0.258 0.229 0,204 0.182 0.163 0.263 0.232 0.205 0.181 0.160 0.141 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 8 9 10 11 0.650 0.286 12 13 0.625 0.601 0.577 14 Table 2: Present Value of an Annuity of $1.00 2% 4% 8% 9% Period 1% 1 0.990 2 1.970 3 2.941 4 3.902 5 4.853 6 5.795 7 6.728 8 7.652 9 8.566 10 9.471 11 10.368 12 11.255 13 12.134 14 13.004 3% 0.971 1.913 2.829 3.717 4.580 5.417 6.230 7.020 7.786 8.530 9.253 9.954 10.635 0.980 1.942 2.884 3.808 4.713 5.601 6.472 7.325 8.162 8.983 9.787 10.575 11.348 12.106 0.962 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 5% 0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 7.722 8.306 8.863 9.394 9.899 6% 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7% 0.935 1.808 2.624 3.387 4.100 4.767 5.389 5.971 6.515 7.024 7.499 7.943 8.358 8.745 4.868 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 10% 11% 12% 13% 14% 15% 0.909 0.901 0.893 0.885 0.877 0.870 1.736 1.713 1.690 1.668 1.647 1.626 2.487 2.444 2.402 2.361 2.322 2.283 3.170 3.102 3.037 2.974 2.914 2.855 3.791 3.696 3.605 3.517 3.433 3.352 4.355 4.231 4.111 3.998 3.889 3.784 4.712 4.564 4.423 4.288 4.160 5.335 5.146 4.968 4.799 4.639 4.487 5.759 5.537 5.3285.132 4.946 4.772 6.145 5.889 5.650 5.426 5.216 5.019 6.495 6.207 5.938 5.687 5.453 5.234 6.814 6.492 6.194 5.918 5.660 5.421 7.103 6.750 6.424 6.122 5.842 5.583 7.367 6.982 6.628 6.302 6.002 5.724 0.917 1.759 2.531 3.240 3.890 4.486 5.033 5.535 5.995 6.418 6.805 7.161 7.487 7.786 7.360 7.887 8.384 8.853 9.295 11.296