Super Fresh Grocery operates a chain of 40 grocery stores. Currently the company is considering starting a new division, Fresh Grocer.com, to provide home delivery services. Customers will be able to order groceries by phone or using the Internet, and FreshGrocer.com will deliver them within 24 hours at a price guaranteed to be identical to the prices charged in the company's stores.
The company has projected revenue and cost related to this business for the next seven years, as follows:

The business will require an initial investment in delivery trucks and other equipment of $500,000. The trucks and equipment will be depreciated over a seven-year life using straight-line depreciation with a residual value of $80,000.
Required
Assume that Super Fresh has decided to limit its analysis to seven years. Calculate the net present value of the new business using a 14 percent required rate of return. Should Super Fresh make the investment in the new business?

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Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Revenue 1,700,000 $1,870,000 $2,057,000 $2,262,700 $2,488,970 $2,737,867 $3,011,654 Less expenses: Cost of merchandise 1,120,000 ,175,000 ,200,000 ,200,000 1,260,000 1,300,000 1,375,000 432,884 462,030 60,000 27,970 1,553,333 1,621,6671,661,667 1,685,0001,761,667 1,821,667 1,925,000 916,200 1,086,654 434,662 414,652 60,000 27,015 Salaries 365,000 60,000 21,667 350,000 380,750 397,000 60,000 28,000 Depreciation 60,000 23,333 60,000 20,917 60,000 28,783 Miscellaneous Total expense Income before taxes 727,303 290,921 146,667 248,333 99,333 395,333 577,700 158,133 231,080 laxes at 40% Net income 58,667 366,480 S 88,000 S 149,000 S 237.200 S 346,620 S 436.382 S 549.720 S 651,992