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A client is considering making a significant investment in a partnership. The investment is being offered...

A client is considering making a significant investment in a partnership. The investment is being offered to her at an initial purchase price of $259,000. After 5 years, she is hoping to sell this investment for $100,000. During the 5-year period, the client expects annual cash flows of $17,500, $88,000, $80,500, $90,000, and $10,000. If the client has a required rate of return of 10%, should she make this investment?

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Answer #1

Net present value of the investment=-259000+17500/1.1+88000/1.1^2+80500/1.1^3+90000/1.1^4+10000/1.1^5+100000/1.1^5=19889.76163

As Net Present Value is positive, make the investment

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