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You are offered an opportunity to invest in a new company venture that will begin paying you $100,000 at the end of each year for
You are offered an opportunity to invest in a new company venture that will begin paying you $100,000 at the end of each year for five years, and then a balloon payment of $200,000 at the end of year 10. You will not receive the first payment until three years from today. If your MARR is 12%, compounded monthly:
a)Show your Cash Flow Diagram:
b)What is the effective annual interest rate?
c) What is the most you are willing to invest in this venture?
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