SECTION V: HOW TO DETERMINE WHETHER INVESTMENTS ARE PROFITABLE A publisher is deciding whether or not to invest in a new computer. The computer would cost $900, and would increase the cash flows in Year 1 by $500 and in Year 3 by $800. Cash flows do not change in Year 2. a. If the interest rate is 12%, what is the Net Present Value of the investment? b. Is the investment in the new computer feasible when the interest rate is 12%? Please explain. c. If the interest rate rises to 25% what is the Net Present Value of the investment and would the investment still take place?
SECTION V: HOW TO DETERMINE WHETHER INVESTMENTS ARE PROFITABLE A publisher is deciding whether or not to invest in a new computer. The computer would cost $900, and would increase the cash flows in Year 1 by $500 and in Year 3 by $800. Cash flows do not change in Year 2. a. If the interest rate is 12%, what is the Net Present Value of the investment? b. Is the investment in the new computer feasible when the interest rate is 12%? Please explain. c. If the interest rate rises to 25% what is the Net Present Value of the investment and would the investment still take place?
Operations Research : Applications and Algorithms
4th Edition
ISBN:9780534380588
Author:Wayne L. Winston
Publisher:Wayne L. Winston
Chapter16: Probabilistic Inventory Models
Section16.3: The News Vendor Problem: Discrete Demand
Problem 9P
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