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You are considering starting a new business. You estimate that the business will generate a net revenue of dollar10,000 each year for five years and
You are considering starting a new business. You estimate that the business will generate a net revenue of dollar10,000 each year for five years and you will be able to sell the equipment at the end of five years for dollar20,000. Using an interest rate of 5percentage and discrete compounding, how much could you invest at year zero and break even over the five years? Draw a cash flow diagram. After further analysis, you decide that you can expect the annual revenue for the opportunity in Problem 3 to increase dollar2,000 each year for the duration of the business. Draw a cash flow diagram and determine how much you could invest at year zero and break even. Use an interest rate of 5percentage
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