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Although the topic of net present value will be reviewed in greater detail later, the calculation of NPV is relatively straightforward so is examined in

  1. Although the topic of net present value will be reviewed in greater detail later, the calculation of NPV is relatively straightforward so is examined in the following problem. You are planning to invest $100,000 in a project that is expected to yield the following cash benefits: $20,000 at the end of the first year, followed by $30,000, $40,000, and $50,000 at the end of the subsequent years. The appropriate discount rate for these cash flow is 8%. What is the NPV of this investment opportunity?

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