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Net Present Value Freefall, Inc., has two investment opportunities, each requiring an initial investment of $65,000. The Required rate of return is 8%. The cash
Net Present Value
Freefall, Inc., has two investment opportunities, each requiring an initial investment of $65,000. The Required rate of return is 8%. The cash inflows for each are provided as follows.
1. Before using calculations, which investment will have the highest net present value? Explain.
2. Calculate the NPV for each investment. Should the company invest in either investment?
3. Give 2 qualitative factors that may impact the companys decision.
Please show work ,I'm trying to understand the problem.
Investment Investment Z Year 1 Year 2 Year 3 Year 4 Total inflows $ 35,000 25,000 15,000 5,000 $ 80,000 $ 5,000 15,000 25,000 35,000 $80,000
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