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This question is about the basic tools of finance. Winstons Fishing Charters can purchase new boats today for $100,000. They will earn a $40,000 return

This question is about the basic tools of finance.

Winstons Fishing Charters can purchase new boats today for $100,000. They will earn a $40,000 return on them at the end of each of the next 3 years.

If the interest rate is 12 percent, what is the present value of each of the future returns that Winstons Fishing Charters expects to receive?
If the interest rate were 12 percent, should they invest in the boats?
If the interest rate is 5 percent, should they invest in the boats?
Compare your answers to parts c and What principle about the relationship between investment and the interest rate is demonstrated by this question?

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