You have a real investment opportunity available to you that requires $400,000.  You have no funds available but you will have income of $120,000 this year.  The real investment will have a net payoff $33,000 at the end of the year.  If the market rate is 7.5% will you make the investment?

Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter1: Introduction To Finance For Entrepreneurs
Section: Chapter Questions
Problem 4EP
icon
Related questions
icon
Concept explainers
Topic Video
Question

I am unsure how to answer this finance question (corporate finance 1)

You have a real investment opportunity available to you that requires $400,000.  You have no funds available but you will have income of $120,000 this year.  The real investment will have a net payoff $33,000 at the end of the year.  If the market rate is 7.5% will you make the investment? 

Expert Solution
steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Capital Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Entrepreneurial Finance
Entrepreneurial Finance
Finance
ISBN:
9781337635653
Author:
Leach
Publisher:
Cengage