Luis is considering purchasing and operating a food truck. He estimates the cost of a fully renovated and equipped food truck to be $102,000 which would be paid in full at the beginning of the project. He estimates cash flows of $19,000, $61,000, and $87,000 at the end of years 2, 7, and 9 respectively. At the end of year 13 the truck will need to be updated making the expected cashflow at the end of year 13 negative $123,000. Luis plans to operate the truck for one more year and then sell it making the total cash flow at the end of year 16 $166,000. Assume the cost of capital is 24.89%. Find the NPV of the food truck project.
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