You are currently the CEO of NewGears and you need to decide whether or not to give the go ahead regarding the firm’s expansion project. The expansion will generate annual cash-flows, starting at €2000 by the end of year 3 and increasing by 1,3% a year until the end of year 12. 

From the end of year 12 onwards it is expected that the annual cash-flows will start to decrease by 2,5% a year in perpetuity (i.e., the cash-flow that occurs by the end of year (12+1) is 2,5% lower than the one that occurs by the end of year 12).

The required initial investment (t=0) is €17000.

Consider an annual effective discount rate of 10,7%.