Question
(a)Initial outlay is $50,000. Cash flows are $25,000, $30,000, and $42,000 in years 1, 2 and 3. The required return is 8%. Draw a time
(a)Initial outlay is $50,000. Cash flows are $25,000, $30,000, and $42,000 in years 1, 2 and 3. The required return is 8%. Draw a time line and calculate NPV. Decide on the investment.
2(b)Initial outlay is $50,000. Project pays $10,000 in one year and cash flows grow at 2% per year. Interest rate is 5%. Draw a time line and find NPV. Make an investment decision based on NPV.
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Focus On Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes, Melissa Hart
7th Edition
1265521972, 978-1265521974
