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Net present value of the investment

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An investment that costs $60,000 will return $25,000 per year for five years. Determine the net present value of the investment if the required rate of return is 14 percent. (Ignore taxes.) Should the investment be undertaken?

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Solution Summary

The solution explains how to calculate the net present value of the investment and make the accept/reject decision.

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NPV = PV of cash flows - initial investment
Cash flows are in the form of annuity. We use ...

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