Suppose Starbucks wishes to sign a 10-year contract to open a location within the Lundquist College of Business. This venture will cost $70,000, and is expected to bring in $10,000 per year.

Starbucks currently finances its operations with 50% equity and 50% debt. They face a 33% tax rate and the YTM on existing Starbucks bonds is 8%. The market expected return is 14%, the risk-free rate is 5% and Starbucks’ Beta is 0.9.

What is the NPV of this venture?