2. Consider a project which requires $1000 of initial investment and generates the next cash flows $300, $300 and $500 over the next three years. When the project is profitable?

The project is profitable after  3.8 years

Explanation:

Year                           Cash Flow                            Cumulative  

0                                  -$1000                                  -$1000

1                                     $300                                    -$700

2                                     $300                                    -$400

3                                      $500                                     $100

400/500 0.8

3.8 years

the first one $24,630

answer; importance to people; or acceptance;