Dropdowns:

a. The investment [should, should not] be made. b. a. The investment [should, should not] be made.

Problem 22-18 A risky $310,000 investment is expected to generate the following cash flows: Year 4 $ 144,000 a. If the firm's cost of capital is 8 percent, should the investment be made? Use Appendix B to answer the question. Use a minus sign to enter a negative value, if any. Round your answer to the nearest dollar. NPV: $ 1 $140,200 2 $ 160,355 3 $ 156,962 The investment -Select- be made. b. An alternative use for the $310,000 is a four-year U.S. Treasury bond that pays $18,600 annually and repays the $310,000 at maturity. Management believes that the cash inflows from the risky investment are equivalent to only 75 percent of the certain investment, which pays 6 percent. Should the investment be made? Use Appendix B to answer the question. Do not round other intermediate calculations. Use a minus sign to enter a negative value, if any. Round your answer to the nearest dollar. NPV: $ The investment -Select- be made