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A software firm has completed a new App. They expect it will earn them around...

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Accounting

A software firm has completed a new App. They expect it will earn them around $1.3 million per year, for maybe five years, at which point it will probably lose appeal and not earn much at all after that. If interest rates are expected to be around 8% during that period

a) How much will the earnings be worth in todays dollars?

b) Will the earnings justify the $5.5 million they have spent developing it?

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