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A risky $320,000 investment is expected to generate the following cash flows: Year 1 2 3 4 $ 117,400 $ 162,195 $ 169,930 $ 133,600
A risky $320,000 investment is expected to generate the following cash flows: Year 1 2 3 4 $ 117,400 $ 162,195 $ 169,930 $ 133,600 a. If the firm's cost of capital is 8 percent, should the investment be made? Use Appendix B to answer the question. Use a minus sign to enter a negative value, if any. Round your answer to the nearest dollar. NPV: $ The investment -Select- vbe made. b. An alternative use for the $320,000 is a four-year U.S. Treasury bond that pays $19,200 annually and repays the $320,000 at maturity. Management believes that the cash inflows from the risky investment are equivalent to only 70 percent of the certain investment, which pays 6 percent. Should the investment be made? Use Appendix B to answer the question. Do not round other intermediate calculations. Use a minus sign to enter a negative value, if any. Round your answer to the nearest dollar. NPV: $ The investment -Select- be made
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