PROBLEM # 4:

You are considering investing $300,000 in an activity which will generate a yearly income of $25,000 for the first 5 year, thereafter the income will increase by $7,000 per year for the following 10 years, when the life of the investment will end. You know that the ongoing money market interest rate is 5%.

1. Should you proceed with the investment? (show the equation)
2. Plot the NPW of the investment for i= 3%, 5%, 7%, 8%, 9%, 10% . At what point does the investment becomes unattractive?