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Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $5,000 at the end of each
Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $5,000 at the end of each of the next three years. The opportunity requires an initial investment of $1,250 plus an additional investment at the end of the second year of $6,250.
Q1) What is the NPV of this opportunity if the cost of capital is 1.8% per year?
Q2) Should Marian take it?
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