Consider a new business line that your company will start:     Costs to launch the project:                                            $6,000,000 Life of the project:                                                            5 years Cash inflows from the project:                                   Year One                                              $  400,000                         Year Two                                              $1,700,000                         Year Three                                            $2,650,000                         Year Four                                             $3,400,000                         Year Five                                             $  950,000 Project Beta                                                                        0.83 Risk-Free Rate                                                                     1.20% Market Risk Premium                                                         5.55% Default Risk Premium for company’s bonds                      1.45% Maturity Risk Premium for company’s bonds                    1.15%     What is the NPV of the Project (rounded to the nearest dollar)?

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.