Pearson International Publishing Company is trying to decide whether to revise its popular textbook, Fundamental of Corporate Finance. The company has estimated that the revision will cost RM65,000. Cash flows for the first year is RM18,000 and it will increase by 4 percent per year. The book will be revised back after five years. The initial costs are paid now, and revenues are received at the end of each year. If the company requires a 10 percent return for the investment, should it undertake the revision.

Pearson International Publishing Company is trying to decide whether to revise its popular textbook, Fundamental of Corporate Finance. The company has estimated that the revision will cost RM65,000. Cash flows for the first year is RM18,000 and it will increase by 4 percent per year. The book will be revised back after five years. The initial costs are paid now, and revenues are received at the end of each year. If the company requires a 10 percent return for the investment, should it undertake the revision.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 24P

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