Problem:
Mikes enterprise sells outdoor swimming pools and currently has an aftertax cost of capital of 12 percent. Reinhold sells pool decks and has an aftertax cost of capital of 9 percent. Mikes enterprise is considering adding pool decks as part of their sales lineup. They estimate that sales from these decks could become 15 percent of thier overall sales. The intial cash outlay for this project is $75000. The expected net cash inflows are $14000 a year for eight years.
Required:
Question: What is the net present value of this project to Mikes Enterprises?
Note: Provide support for rationale.