Phuc is considering investing in a project that runs for 10 years. It involves spending $40,000 immediately, but returns an equal amount of $500 at the beginning of every month for the first 5 years, then an equal amount of $1400 at the beginning of every 6 months for the next 5 years. The interest rate is 5% per annum, compounded monthly for the first 5 years then 8% per annum, compounded semi-annually for the next 5 years.Should Phuc invest in this project?

What is the PV of the cash flows received in the first 5 years?(2 marks)

$Answer

.

What is the PV of the cash flows received in the following 5 years?(2 marks)

$Answer

.

The NPV of the investment is $Answer

(1 mark), hence Phuc should