d) A company is offered a contract promising annual net returns of $22,000 for six years. If the company accepts the contract, it must immediately spend $ 70,000 to set up its plant for production. After the six years this set-up would have no residual value. Should the contract be accepted if the required rate of return is 10%?

Advanced Engineering Mathematics
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ISBN:9780470458365
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d) A company is offered a contract promising annual net returns of $22,000 for six years. If the
company accepts the contract, it must immediately spend $ 70,000 to set up its plant for
production. After the six years this set-up would have no residual value. Should the contract
be accepted if the required rate of return is 10%?
Transcribed Image Text:d) A company is offered a contract promising annual net returns of $22,000 for six years. If the company accepts the contract, it must immediately spend $ 70,000 to set up its plant for production. After the six years this set-up would have no residual value. Should the contract be accepted if the required rate of return is 10%?
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