A start-up in the retail market plans to invest $200,000 in advertising in its first start-up and reduce that amount by $20,000 each year for the next five years. The company forecasts annual net revenue, excluding advertising spend, of $400,000 in the first year. Revenue is also expected to increase by $50,000 per year from the second through fifth periods. Calculate the uniform annual value for the net cash flow of this retail company for an interest rate of 8% per year.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A start-up in the retail market plans to invest $200,000 in advertising in its first start-up and reduce that amount by $20,000 each year for the next five years. The company forecasts annual net revenue, excluding advertising spend, of $400,000 in the first year. Revenue is also expected to increase by $50,000 per year from the second through fifth periods. Calculate the uniform annual value for the net cash flow of this retail company for an interest rate of 8% per year.

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