Problem:
Cellular Labs will invest $150,000 in a project that will not begin to producereturns until after the third year. From the end of the 3rd year until the end of the 12th year (10 periods), the annual cash flow will be $40,000. If the cost of capital is 12 percent, should this project be undertaken?
Requirement:
Question: Find the net present value of the investment described in problem 16 on page 401 assuming, hypothetically, an internal rate of return on 16%. Explain your answer.
Note: Please provide through step by step calculations.