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What is the maximum that should be invested in a project at time zero if the inflows are estimated at $50,000 annually for 3 years, and the cost of capital is 19%?

Respuesta :

Answer:

Step-by-step explanation:

Given that inflows are estimated at $50,000 annually for 3 years

Thus we find that total inflows are

I year         50000

II year         50000

III year        50000

                  150000

Maximum investment should be the one which equals present value of inflow

 Interest  19%

Year Inflow Pre. Value  

I 50000 42016.80672  

II 50000 35308.24094  

III 50000 29670.79071  

   

Total inflow at present value   106995.8384  

   

Max Amount to be invested  106995.8  

Answer is 106995.80

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