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A company has an investment project that would cost $10 million today and yield a payoff of $15 million in 4 years. (A.) Should the firm undertake the project if the interest rate is 11 percent? 10 percent? 9 percent? 8 percent? (B.) Can you figure out the exact cutoff for the interest rate between profitability and nonprofitability?

Microeconomics, Economics

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