Explore BrainMass

Investment problem: what is the maximum amount to pay for an investment?

An investment is expected to generate $2,000,000 each year for four years. If the firm's cost of funds is 5%, what is the maximum amount the firm should pay for the investment?

Please respond in Excel.

Solution Preview

See attached file.

Here we need to calculate the present value of the cash inflows, and investment should not ...

Solution Summary

In an Excel format, the response explains and shows the calculations for the answer.