Question
Josh is considering an investment in a carrot producing facility. This facility requires an investment of $100,000 at time 0. It will then produce revenues
Josh is considering an investment in a carrot producing facility. This facility requires an investment of $100,000 at time 0. It will then produce revenues (in real terms) of $70,000, $60,000, $50,000, in years 1, 2, and 3, respectively. This process must be repeated indefinitely (that means forever). For example, in year 3, Josh would have to invest another $100,000 dollars and then get revenues (again in real terms) of $70,000, $60,000, $50,000, in years 4, 5, and 6, respectively. Josh's real MARR is 6% per year compounded yearly. Is this a good investment and what is the PV of the investment?
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