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Part 1

Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay

$5,440

at the end of each of the next

3

years. The opportunity requires an initial investment of

$1,360

plus an additional investment at the end of the second year of

$6,800.

What is the NPV of this opportunity if the interest rate is

1.7%

per year? Should Marian take it?

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