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A company is about to invest in a joint venture research and development project with another company. The project is expected to last 1 2
A company is about to invest in a joint venture research and development project with another company. The project is expected to last years, but yearly payments the company makes will begin immediately a payment is made today, and the last payment is years from today Each payment will be made up of: Salaries, which are $ every year, and Equipment Costs and Facility Overhead, which will start at $ and drop by $ every year until a cost of $ is reached, where this cost will remain constant until the end of the project.
a Draw a cash flow diagram to illustrate the cash flows for this project.
b At an interest rate of what is the total future worth of all project
payments at the end of the years?
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