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Compounded annually on a mutual fund

PROBLEM: You have an opportunity to invest in a business that will pay $200,000 in one year, $400,000 in two years, $600,000 in three years and $800,000 in four years. You can earn 12% per year compounded annually on a mutual fund that has similar risk. If it costs $1.2 million to start this business, what is the NPV & should you invest?

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Compounded annually on a mutual fund

Reference No:- TGS01451381

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : How do variable costs and fixed costs differ

Q : Internal and external users of financial data

Q : Break-even chart break-even volume

Q : Sole proprietorships and partnerships

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Compounded annually on a mutual fund

Reference No:- TGS01451381

Recent Questions Asked Finance Basics

Q : How do variable costs and fixed costs differ

Q : Internal and external users of financial data

Q : Break-even chart break-even volume

Q : Sole proprietorships and partnerships

Q : Compounded annually on a mutual fund

Q : Annual to semiannual bonds analysis

Q : Percentage changes for the latter two periods

Q : Expect the rate of inflation

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