Question - Your firm, Nurse International has identified an investment for your hospital. Your boss is expecting you to complete a comprehensive, analytical, response to this project (details to follow) . Your firm's opportunity cost rate is 12%.
|
Year
|
Cash Flow
|
|
0
|
($1,000)
|
|
1
|
250
|
|
2
|
400
|
|
3
|
500
|
|
4
|
600
|
|
5
|
600
|
a) What is the return expected on this investment measured in dollars if the firms opportunity cost rate is 12 percent?
b) Provide an explanation, in economic terms, of your answer?
c) What is the return on this investment measured in percentage terms?
d) Should this investment be made? Explain your answer.