An ambitious investor decides to take a chance on a creative start-up opportunity. The owner of...

 

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An ambitious investor decides to take a chance on a creative start-up opportunity. The owner of the start-up has made the following promise in exchange for your capital today. The start-up will not make any payments to you for 15 years. At the end of the 15th year, you will be paid $10,000. This will be the first of 20 yearly payments. The start-up promises that each payment will be 3% larger than the previous year. If you require a 11% return on your capital, how much can you invest in the start-up today? An ambitious investor decides to take a chance on a creative start-up opportunity. The owner of the start-up has made the following promise in exchange for your capital today. The start-up will not make any payments to you for 15 years. At the end of the 15th year, you will be paid $10,000. This will be the first of 20 yearly payments. The start-up promises that each payment will be 3% larger than the previous year. If you require a 11% return on your capital, how much can you invest in the start-up today?

Answer rating: 100% (QA)

To find out how much you can invest in the startup today we need to calculate the present val... View the full answer