The Spoon Restaurant is considering a project with an initial cost of $525,000. The project will not produce any cash flows for the first 3 years. Starting in Year 4, the project will produce cash flows of $721,000 for 3 years. The project is risky, so the firm has assigned it a discount rate of 17 percent. What is the project's net present value?

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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.