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A firm can invest $5 million today in order to receive two payments. The first payment, $700,000, occurs exactly 3 years from today; the second
A firm can invest $5 million today in order to receive two payments. The first payment, $700,000, occurs exactly 3 years from today; the second payment, $6 million, occurs exactly 6 years from today. QUESTION: Should the firm make this investment? Answer YES or NO, and support your answer using the NET PRESENT VALUE criterion and a discount rate of 9%. (You must SHOW your calculations to receive any credit for your answer.)
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