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An investment will generate $8,000 a year for 30 years. If you can earn 10 percent...

An investment will generate $8,000 a year for 30 years. If you can earn 10 percent on your funds and the investment costs $90,000, calculate the present value of investment. Use Appendix D to answer the question. Round your answer to the nearest dollar. $ Should you buy it? -Select- Calculate the present value of investment, if you could earn only 6 percent. Use Appendix D to answer the question. Round your answer to the nearest dollar. $ Should you buy it in this case? -Select-

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Answer #1

Investment cos = $90,000

Investment will generate $8,000 per year for 30 years

1. r = 10%

NPV is negative, we should not buy this.

2. r = 6%

NPV is positive, we should buy in this case

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