6. Finance.com has an opportunity to invest in a new high-speed computer that costs $50,000. The computer

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6. Finance.com has an opportunity to invest in a new high-speed computer that costs

$50,000. The computer will generate cash flows (from cost savings) of $25,000 one year from now, $20,000 two years from now, and $15,000 three years from now. The computer will be worthless after three years, and no additional cash flows will occur. Finance.com has determined that the appropriate discount rate is 7 percent for this investment. Should Finance.com make this investment in a new high-speed computer? What is the present value of the investment?

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Corporate Finance

ISBN: 9780071229036

6th International Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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