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Harvey Corp is considering expanding into South America. To finance the expansion, Harvey’s cost of capital...

Harvey Corp is considering expanding into South America. To finance the expansion, Harvey’s cost of capital is 15%. Harvey’s financial analyst believes that future cash flows from the expansion will be:

2016                     $140,000

2017                     $425,000

2018                     $1,246,000

2019                     $1,389,000

2020 to 2024                     $1,416,200

If the cost of expansion is estimated at $6,500,000, is the present value of the future cash flows worth more than the cost? By how much?

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