homplontability? 3. Your bank account pays an interest rate of 8 percent. You are considering buying a share of stock in XYZ Corporation for 110 After 1,2, and 3 years, it will pay a dividend of 5 .You expect to sell the stock after 3 years for 120 . Is a good investment?Support your answer with calculations.

To determine if the investment in XYZ Corporation is a good one, we need to calculate the net present value (NPV) of the expected cash flows from the investment. The NPV is a measure of the value of an investment, taking into account the time value of money.<br /><br />The expected cash flows from the investment are as follows:<br /><br />* After 1 year: $\$5$ dividend<br />* After 2 years: $\$5$ dividend<br />* After 3 years: $\$5$ dividend + $\$120$ sale price<br /><br />The interest rate is 8 percent, which we will use to discount the cash flows to their present value.<br /><br />To calculate the NPV, we will use the following formula:<br /><br />NPV = $\sum$ (Cash Flow / (1 + Interest Rate)^Year)<br /><br />Let's calculate the NPV:<br /><br />NPV = ($5 / (1 + 0.08)^1) + ($5 / (1 + 0.08)^2) + (($5 + $120) / (1 + 0.08)^3)<br /><br />NPV = ($5 / 1.08) + ($5 / 1.1664) + ($125 / 1.259712)<br /><br />NPV = $4.63 + $4.29 + $98.88<br /><br />NPV = $107.80<br /><br />Since the NPV is positive, the investment in XYZ Corporation is expected to be a good one.