A firm that provides daycare for small children is considering expanding their business and opening a new daycare at a different location. They will use this new location for 30 years (t = 0, ..., 29).
Use a 3% discount rate.
If they do so, they will have to pay $51,000 immediately (t = 0) to get the location ready, and then $316,000 per year for rent, labour, and supplies (t = 1, ..., 29).
They will earn revenue from the new location of $469,000 per year (t = 1, ..., 29).
Calculate the net present value of opening the new location.