Your brother has been offered a project paying a $725 annuity due for the next 15 years. What is the maximum amount of money your brother should invest in this project if he has a 12.45 percent rate of return on the investment? a. $124.73
b. $4,821.50
c. $2,985.03
d. $5,421.78

d. $5,421.78

Explanation:

We need to calculate the Net Present Value using the Internal Rate of Return given on this project. This would give us the maximum amount of money your brother should invest in this project. By doing this, we get the Initial cost that equals the present value of the annual cashflows and this is the maximum that can be invested.

Using a Financial Calculator, the Net Present Value will be calculated as follows :

Use the CFj function

$725             CFj

Nj                  15 (for number of years)

i                     12.45 %

Shift NPV = $5,421.78

Therefore,  the maximum amount of money your brother should invest in this project is $5,421.78.

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.

answer; experimentation;