(b)Pearson International Publishing Company is trying to decide whether torevise its popular textbook, Fundamental of Corporate Finance. The companyhas estimated that the revision will cost RM65,000. Cash flows for the firstyear is RM18,000 and it will increase by 4 percent per year. The book will berevised back after five years. The initial costs are paid now, and revenues arereceived at the end of each year. If the company requires a 10 percent returnfor the investment, should it undertake the revision.

In this we have to find the net present value and check weather it is positive or negative.

Answered: Pearson International Publishing…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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