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

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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.

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Solution Summary

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

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See attached file.

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

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Manal Elkhoshkhany, MBA
Education
  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
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