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then is this an acceptable investment? Show why.

then is this an acceptable investment? Show why.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Your brother needs a $5,000 loan to go to college. Because of his poverty, he will pay nothing for the next four years. Five years from today he will begin paying you $2,500 a year for the next 4 years. The first payment occurs 5 years from today, and the total of the four payments will be $10,000. Create a cash flow diagram, assuming no inflation. If your MARR is 8%, then is this an acceptable investment? Show why.
Transcribed Image Text:Your brother needs a $5,000 loan to go to college. Because of his poverty, he will pay nothing for the next four years. Five years from today he will begin paying you $2,500 a year for the next 4 years. The first payment occurs 5 years from today, and the total of the four payments will be $10,000. Create a cash flow diagram, assuming no inflation. If your MARR is 8%, then is this an acceptable investment? Show why.
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