A project has an initial cost of $40,000, expected net cash inflows of $8,000 per year for 11 years, and a cost of capital of 11%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent.

an externality, market failure

Explanation:

Externality, simply refers to the gains and the costs that a third party gets due to the productivity or consumption activities of an individual or firm. In the above question, a negative externality occurs as the production of the firm has a negative effect on wildlife and the people living in the area.

In this case, the externality results in market failure which is due to the inefficiency with regards to the distribution of the goods in the free market.