Question
A friend proposes to him to invest in a business for which he has projected the following costs and income: 1. Initial cost of $
A friend proposes to him to invest in a business for which he has projected the following costs and income: 1. Initial cost of $ 100 0002. Expenditure in year 1 of $ 50 0003. Annual expenses from year 2 to 10 of $ 10 000. Additionally he projects that from In year 4, these expenses will increase by $ 2,000 each year. 4. Annual income of $ 40,000 from year 1 to 10. Additionally, it projects that from year 4, income will grow by 15% each year. a) (10 points) calculate the PV using a 5% rate b) (5 points) calculate the annual value using a 5% rate c) (5 points) would you invest in this business? Why? ~ 5 ~
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