A firm learns a firm has an investment opportunity that will earn future revenue 4 years from now by $160,000. The marginal cost of the physical capital today is $125,000. The firm makes this investment at an interest rate of 5%. Using this information answer the questions below:

1. Should this frim make this investment?
2. What is the discounted percentage for this investment?
3. Other things being equal, could this investment be made a higher interest rate? Lower? Why
4. Other things being equal, could this investment be made for longer term? Shorter term? Why?

Question 5: Investment over time?

A rental company is looking to purchase equipment for a marginal resource cost of $50000. The company will earn a revenue of $4000 per year for 5 years. At year 5, the company will also earn a salvage value of the equipment of $10000. The interest on the borrowing is 7%

a. Fill in the table below

Year	Future Value	Present Value	Discount Factor (percentage)
1
2
3
4
5

b. Should this firm invest. show why or why not?