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Exhibit 8-2 Liam Company has two independent investment opportunities, each requiring an initial investment of $130,000. The company's required rate of return is 12 percent.
Exhibit 8-2 Liam Company has two independent investment opportunities, each requiring an initial investment of $130,000. The company's required rate of return is 12 percent. The cash inflows for each investment are provided below. Investment A Investment B Year 1 $70,000 $ 10,000 Year 2 50,000 30,000 Year 3 30,000 50,000 Year 4 10,000 70,000 Total inflows $160,000 $160,000 Factors: Present Value of $1 Factors: Present Value of an Annuity (r-12%) (r-12%) Year 01 1.0000 Year 1 0.8929 Year 1 0.8929 Year 2 0.7972 Year 21 1.6901 Factors: Present Value of $1 Factors: Present Value of an Annuity Year 0 (r=12%) 1.0000 (r=12%) Year 1 0.8929 Year 1 0.8929 Year 2 0.7972 Year 2 1.6901 Year 3 0.7118 Year 3 2.4018 Year 4 0.6355 Year 4 3.0373 Refer to Exhibit 8-2. What is the net present value of Investment A (rounded to the nearest dollar)? O $72 O $15,600 O $30,000 O $361,680 None of the answer choices is correct
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