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Consider the following investment cash flows: Year Cash Flow 0 - $ 1 , 1 0 0 1 $ 2 7 5 2 $ 3
Consider the following investment cash flows:
Year Cash Flow
$
$
$
$
$
$
a What is the return expected on this investment measured in dollar terms if the opportunity cost rate is
b Provide an explanation, in economic terms, of your answer.
c What is the return on this investment measured in percentage terms?
d Should this investment be made? Why?
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