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Aaron Heath is seeking part-time employment while he attends school. He is considering purchasing technical equipment that will enable him to start a small training

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Aaron Heath is seeking part-time employment while he attends school. He is considering purchasing technical equipment that will enable him to start a small training services company that will offer tutorial services over the internet. Aaron expects demand for the service to grow rapidly in the first two years of operation as customers leam about the avaliability of the Internet assistance. Thereaftec he expects demand to stabilize. The following table presents the expected cash flows: In addition to these cash flows, Aaron expects to pay $20,500 for the equipment. He also expects to psy $2,900 for a major overhaul and updating of the equipment at the end of the second year of operation. The equipment is expocted to have a $1,900 salvage value and a four year usefut life. Aaron desires to earn o rate of return of 10 percent. (PV of $1 and PVA of $ ) (Use appropriate factor(s) from the tables provided.) Aequired a. Calculate the net present value of the irvestment opportunity. (Negative amount should be indicated by a minus sign, Round intermediate calculations and final answer to 2 decimal places.) b. Indicate whether the investrinent opportunity is expocted to earn a return that is above or below the desired rate of refurn and whecher it should be accepted

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