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.

The expected cash flows from the investment are as follows:

* After 1 year: $$\$5$$ dividend
* After 2 years: $$\$5$$ dividend
* After 3 years: $$\$5$$ dividend + $$\$120$$ sale price

The interest rate is 8 percent, which we will use to discount the cash flows to their present value.

To calculate the NPV, we will use the following formula:

NPV = $$\sum$$ (Cash Flow / (1 + Interest Rate)^Year)

Let's calculate the NPV:

NPV = ( $$5 / (1 + 0.08)^1) + ($$ 5 / (1 + 0.08)^2) + (( $$5 +$$ 120) / (1 + 0.08)^3)

NPV = ( $$5 / 1.08) + ($$ 5 / 1.1664) + ( $$125 / 1.259712) NPV =$$ 4.63 + $$4.29 +$$ 98.88

NPV = $107.80

Since the NPV is positive, the investment in XYZ Corporation is expected to be a good one.