Health Bars Is Considering a Two- Year Advertising Campaign

Multiple Choice

Health Bars is considering a two- year advertising campaign. The campaign will cost $50,000 at the end of the first year and $60,000 at the end of two years. The managers of Health Bars have estimated that the campaign will generate $40,000 a year in additional profit for the next three years. If the discount rate is 5 percent, what is the net present value of the advertising campaign?

A) $2,542
B) $6,889
C) $12,582
D) $5,200