Sail with Us Is Considering a Three- Year Advertising Campaign

Multiple Choice

Sail with Us is considering a three- year advertising campaign. The campaign will cost $100,000 at the end of each of the three years. The managers of Sail with Us have estimated that the campaign will generate $80,000 a year in additional profit for the next five years. If the discount rate is 2 percent, what is the net present value of the advertising campaign?

A) $88,688
B) $90,213
C) $78,569
D) $95,228