Exercise 2 Investment, period 0 = $500,000 Cash Flow, year 1 = $150,000 CF, year 2 = $300,000 CF, year 3 = $440,000 interest rate = 6% inflation rate = 2% Return on best alternative investment = 11% NPV = ---- initial investment + CF41/(1.0+ J^1 + CFx2/(1.0+ J^2 + CF43/(1.0+ ^3 Exercise 3 Investment, period 0 = $2,000,000 Cash Flow, year 1 = $350,000 CF, year 2 = $800,000 CF, year 3 = $1,140,000 CF, year 4 = $900,000 CF, year 5 = $740,000 interest rate = 3.5% inflation rate = 2% Return on hest alternative investment = 12%