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(Solution document) Question: Growing annuity Southern publishing company is trying to decide whether or not to revise its popular textbook, financial psychoanalysis...


Question: Growing annuity Southern publishing company is trying to decide whether or not to revise its popular textbook, financial psychoanalysis made simple. it has estimated that the revision will cost 13500. cash flow from increase sales will be 38000 the first year. This case flows will increase by 5.5% per year. The book will go out of print 5 years from now. Assume that the initial cost is paid now and revenues are received at the end of each year, If the company requires a return of 11% for such an investment, should it undertake the revision?

Pls provide the answer including every detail (not just the solution)--step by step.

Book: Corporate finance 5th edition (Author Ross et al)

Page number: Chapter 4 pp 122. Question #: 33

 







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