A. Consider the project with the following expected cash flows:
Year Cash flow
0 - $400,000
1 $100,000
2 $120,000
3 $850,000
• If the discount rate is 0%, what is the project's net present value?
• If the discount rate is 2%, what is the project's net present value?
• If the discount rate is 6%, what is the project's net present value?
• If the discount rate is 11%, what is the project's net present value?
• With a cost of capital of 5%, what is this project's modified internal rate of return?
Year Cash flow
0 - $400,000
1 $100,000
2 $120,000
3 $850,000
• If the discount rate is 0%, what is the project's net present value?
• If the discount rate is 2%, what is the project's net present value?
• If the discount rate is 6%, what is the project's net present value?
• If the discount rate is 11%, what is the project's net present value?
• With a cost of capital of 5%, what is this project's modified internal rate of return?
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