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Your crazy brother-in-law has discovered a map to the Lost Dutchman gold mine in the Arizona desert. He wants you to give him $10,000 today

  1. Your crazy brother-in-law has discovered a map to the Lost Dutchman gold mine in the Arizona desert. He wants you to give him $10,000 today and then another $10,000 every year for the next 5 years to help fund his expedition. Hell then give you $100,000 in Year 6 when the gold is recovered. Use a discount rate of 12%. What is the NPV and IRR of this proposal? What does the IRR tell you and do you trust it? Why or why not? What components go into your personal choice of discount rate?

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