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S8.9 - Determine whether the decision to invest in an option is sensitive to the retention period An engineer has been offered an investment opportunity

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S8.9 - Determine whether the decision to invest in an option is sensitive to the retention period An engineer has been offered an investment opportunity that will require an immediate cash outlay of $40,000 for a cash inflow of $3500 for each year of investment. However, she must state now the number of years she plans to retain the investment. Additionally, if the investment is retained for 6 years, a lump-sum amount of $40,000 will be returned to her; after 10 years, the lump-sum return is anticipated to be $55,500, and after 15 years, it is estimated to be $54,000. Money is currently worth 10% per year. Determine the present worth values for 6 years, 10 years, and 15 years, and decide if the decision is sensitive to the retention period? The present worth when the investment is retained for 6 years is $ The present worth when the investment is retained for 10 years is $ The present worth when the investment is retained for 15 years is $ The present worth is to the investment period

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