Consider a project that requires an initial investment of $100,000 Resolved Question:

Consider a project that requires an initial investment of $100,000 and will produce a single cash flow of $150,000 in five years.

a. What is the NPV of this project if the five-year interest rate is 5% (EAR)?

b. What is the NPV of this project if the five-year interest rate is 10% (EAR)?

c. What is the highest five-year interest rate such that this project is still profitable?

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