Should the firm undertake the project at the interest rate

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1.A company has an investment project that would cost $10 million today and yield a payoff of $15 in four years.

a. Should the firm undertake the project if the interest rate is 11percent? 10 percent?, 9 percent?, 8 percent?

b. Can you figure out the exact cutoff for the interest rate between profitability and nonprofitability?

2. According to an old myth, Native Americans sold the island of Manhattan about 400 years ago for $24.00 . If they had invested this amount ay an interest rate of 7 percent per year, how much would they have today?

Reference no: EM13222681

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