?An investment is expected to generate $1,000,000 each year for 4 years. If the firm's cost of funds is 10%, what is the maximum amount the firm should pay for the investment?
What will be an ideal response?
X = $1,000,000(3.170) = $3,170,000
3.170 is the interest factor for the present value of an annuity at 10% for four years. (PV = ?; N = 4; I = 10; PMT = 1000000, and FV = 0. PV = -3169865.)?
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