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Athens Corporation has the opportunity to invest $10,000 in a subsidiary business venture that will generate a one-time $20,000 cash payment in 3 years. Using
Athens Corporation has the opportunity to invest $10,000 in a subsidiary business venture that will generate a one-time $20,000 cash payment in 3 years. Using the net present value method and assuming the market interest rate is 15%, should Athens invest in this venture? a.) Yes, Athens should invest in the business venture. The net present value of the $20,000 cash payment is $13,150.32 which is greater than $10,000 the investment they would make. b.) No, Athens should not invest in the business venture. The net present value of the $20,000 cash payment is $6,179.56 which is less than $10,000 the investment they would make. c.) No, Athens should not invest in the business venture. The net present value of the $20,000 cash payment is $7,849.68 which is less than $10,000 the investment they would make. d.) Yes, Athens should invest in the business venture. The net present value of the $20,000 cash payment is $20,000 which is greater than $10,000 the investment they would make
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