Question

A resort new dining room addition estimated cost to complete is $100,000. Over a 10-year period,...

A resort new dining room addition estimated cost to complete is $100,000. Over a 10-year period, this new dining room is projected to generate $11,000 net profit (positive cash flow) per year. Using the net present value analysis (NPV), where the annual discount rate is 5% and a 10-year usuable life for the dining room:

1. Compute the projected NPV

2. Do you recommend going ahead with the construction? Why and why not?

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