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2. A capital investment can be purchased for an immediate outlay of $100,000. The investment is expected to produce annual ca
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Answer #1

Present value of annuity due=(1+Rate)*Annuity[1-(1+interest rate)^-time period]/rate

=1.1*10,000[1-(1.1)^-20]/0.1

=10,000*9.36492009

=$93649.20

NPV=Present value of inflows-Present value of outflows

=93649.20-100,000

=($6350.8)(Negative)(Approx)

Hence since net present value is negative;wealth is being destroyed.

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