Would it still be profitable if it required an initial investment of $1,500,000? b) If we take these annual revenues of $200,000 growing at a 1% per year, and we invest them in a bank account that offers an annual rate of 5% for 10 years, how much will we have at the end?
Would it still be profitable if it required an initial investment of $1,500,000? b) If we take these annual revenues of $200,000 growing at a 1% per year, and we invest them in a bank account that offers an annual rate of 5% for 10 years, how much will we have at the end?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 5PB: Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated...
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A project, that consists of just readjusting some parts to adapt them to assemble to electric cars, would produce net revenues of $200,000 per year, for 10 years. Assuming that these revenues will grow at a constant 1% per year, and are assessed at a cost of capital of 4%:
a) Would it still be profitable if it required an initial investment of $1,500,000?
b) If we take these annual revenues of $200,000 growing at a 1% per year, and we invest them in a bank account that offers an annual rate of 5% for 10 years, how much will we have at the end?
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