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7 You are considering investing in a company that makes cell phones. It will take three years for the business to sell its first product.

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7 You are considering investing in a company that makes cell phones. It will take three years for the business to sell its first product. You can expect to make $200k in year 4 and $600k in each of years 6, 7 and 8. Your return on alternative investments is 6%. How much can you afford to invest (to the nearest $1k)? There is more than one right answer (A) $2,000,000 (B) $1,357,000 (C) =$200k (PV/FV,6%,4)+$600k(PVIA,6%,3)(PV/FV,6%,5) (D) =$200k (PV/FV,6%,4)+$600K(PVIA,6%,3)(PV/FV,6%,6) (E) =$200k/c/1.06)^4+$600k/(1.06)^6

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