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NET PRESENT VALUE (20 points) Your company is trying to decide whether or not to invest in a new project opportunity based on the following

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NET PRESENT VALUE (20 points) Your company is trying to decide whether or not to invest in a new project opportunity based on the following information. The initial cash outlay will total $275,000 over two years. The firm expects to invest $200,000 immediately (Year 0) and the final $75,000 in one year's time (Year 1). The company predicts that the project will generate a stream of earnings of $43,000, $94,000, $175,000, and $70,000 per year, respectively, starting in Year 2. The required rate of return is 11.5% (this includes desired profit margin AND inflation). Should you invest in the project? 3

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