Investment that requires an initial expenditure

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You are considering a 10-year investment that requires an initial expenditure of $400,000. You do not expect any net cash flows during the first five years. At the end of year six, the investment is expected to generate $200,000 of net cash inflow. The net cash inflow will grow by 10% per year thereafter, until and including the end of the 10th year. Assuming that the discount rate is 15% per year, should you accept the investment or not? Show your calculation.

Reference no: EM131347599

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