Recalculate the NPV for the Proposal in Question 94, Now

question 102

Essay

Recalculate the NPV for the proposal in question 94, now assuming that the $45,000 in annual revenues will grow at a 6 percent annual rate and that the $15,000 in annual expenses will grow at a 5 percent annual rate.Does this change your decision on the project? Explain the implications of the difference between the two questions' results.
$$\begin{array} { | l | r | r | r | r | r | r | } \hline & { \text { Year 0 } } & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & { \text { Year 4 } } & { \text { Year 5 } } \\\hline \text { Cost } & - 100,000 & & & & & \\\hline \text { Charige in Workirg } & & & & & & \mathbf { 8 , 0 0 0 } \\\hline \text { Capital } & - 8,000 & & & & & \\\hline \text { Reveruses } & 45,000 & 47,700 & 50,562 & 54,101 & 57,888 & \\\hline \text { - Expenses } & 15,000 & 15,750 & 16,538 & 17,364 & 18,580 & \\\hline \text { - Dep } & & 19,000 & 19,000 & 19,000 & 19,000 & 19,000 \\\hline \text { = Pretax Profit } & & 11,000 & 12,950 & 15,024 & 17,737 & \mathbf { 2 0 , 3 0 8 } \\\hline \text { Taxes } & & 3,850 & 4,533 & 5,258 & 6,208 & 7,108 \\\hline \text { Profit } & & 7,150 & \mathbf { 8 , 4 1 7 } & 9,766 & 11,529 & 13,200 \\\hline \text { Salvage Value } & & & & 5,000 & & \\\hline \text { Tax effect } & & & & & 0 & \\\hline \text { Cash Flows } & - 108,000 & 26,150 & 24,417 & 28,766 & 30,529 & 45,200 \\\hline\end{array}$$

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Definitions:

Bones

are the rigid organs that constitute part of the vertebrate skeleton, providing support and protection for the body's organs.

Osteoarthritis

A degenerative joint disease characterized by the breakdown of joint cartilage and underlying bone, leading to pain and stiffness.

Symptom

Any perceptible change in the body or its functions that indicates disease or the phase of a disease.

Bone Atrophy

The loss or thinning of bone tissue, often due to lack of use or hormonal changes.