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Fastbit Corp. has an opportunity to invest in a new high-speed computer that costs $50,000. The computer will generate cash flows (due to cost savings) of $25,000 one year from now, $20,000 two years from now, and $15,000 three years from now. The computer will be worthless after three years. Fastbit financial managers have determined that the appropriate discount rate for this investment is 7% per year, compounded annually. Should Fastbit invest in this computer, and what is the net present value of the investment?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92793012

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