1.

a)b)

The Horizon Company will invest $69,000 in a temporary project that will generate the following cash inflows for the next three years. Year Cash Flow 1 $23,000 2 36,000 3 38,000 The firm will also be required to spend $19,000 to close down the project at the end of the three years. a. Compute the net present value if the cost of capital is 9 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net present value b. Should the investment be undertaken? No O Yes Mr. Dow bought 100 shares of stock at $25 per share. Three years later, he sold the stock for $31 per share. What is his annual rate of return? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Annual rate of return %