Question

X Company has an opportunity to accept a special order that will result in immediate profit...

X Company has an opportunity to accept a special order that will result in immediate profit of $76,000. After doing some market research that cost $4,500, the marketing manager believes that if X Company accepts the order, the company will lose regular customers. Specifically, she believes the effect will be lost profits of $8,500 in each of the next 5 years.

Assuming a discount rate of 7%, what is the net present value of accepting the special order? [Note: Use the Present Value tables in the Coursepack.]

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