The Horizon Company

4. The Horizon Company will invest $60,000 in a temporary project that will generate the following cash inflows for the next three years. Show your work

Year1 Cash Flow$15,000
Year2 Cash Flow$25,000
Year3 Cash Flow$40,000

The firm will also be required to spend $10,000 to close down the project at the end of the three years. If the cost of capital is 10 percent, should the investment be undertaken?


5. The Ogden Corporation makes an investment of $25,000, which yields the following cash flows:

Year1 Cash Flow=5,000
Year2 Cash Flow=5,000
Year3 Cash Flow=8,000
Year4 Cash Flow=9,000
Year5 Cash Flow=10,000

What is the net present value with a 9 percent discount rate (cost of capital)? Show your work