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1) Determine the profitability index for the investment with the given cash flows given a 9% required return?

Year   Cash Flow
 0        $-20,500
 1        $7,300
 2        $9,500
 3        $8,500

2) You are offered the contract with signing bonus. If they presented you either $215,000 in cash or $2,000 a month for 15 years, guaranteed, which do you take (based strictly on the math)? Your safe rate of return is 7.5%.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914582

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