If an investment project costing $2,800 was expected to yield $1,000 (to be received at year end) for each of the next three years, a profit-maximizing entrepreneur would

Question

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The entrepreneur would undertake the project if the present value of the expected cash flows ($1,000 per year for three years) is greater than the initial investment of $2,800. This depends on the interest rate; if it is low enough, the present value will exceed $2,800, making the project worthwhile.

If an Investment Project Costing $2,800 Was Expected to Yield