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1) The Hudson Corporation makes an investment of $24,000 that provides the following cash flow:

Year                             Cash

1 .........................        $13,000

2 .........................        13,000

3..........................        4,000

  1. What is the net present value at an 8 percent discount rate?
  2. What is the internal rate of return?
  3. Is this problem, would you make the same decision under both parts A and B?

2) Mrs. Crawford will receive $7,600 a year for the next 19 years from her trust. If a 14 percent interest rate is applied, what is the current value of the future payments?

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