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The cash flows for an investment project are listed below. The firm will invest if the present value of the cash flows is positive. Year

The cash flows for an investment project are listed below. The firm will invest if the

present value of the cash flows is positive.

Year 1 Year 2 Year 3

200 100 120

Should the firm undertake this project:

a) [5 points] If the interest rate is 5 percent?

b) [5 points] If the interest rate is 10 percent?

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