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(1 point) You are considering an investment of $200 now, that will result in income of $110 after 1 year, and income of $120 after
(1 point) You are considering an investment of $200 now, that will result in income of $110 after 1 year, and income of $120 after 2 years. You would like to analyze this possible investment to determine the internal rate of return. Let xo, x1,x2 represent the cash flow stream relative to your wallet. Then Xo= In computing the present values of the cash flows, the discount factors are d(0,0) = Express the discount factors in terms of r, the (as yet unknown) effective annual interest rate. Type r as r. The present values of the cash flows, are ,X2 = , PV[A ] = , PV[X2] = Type r as . As a function of r, the net present value of the cash flow stream is The internal rate of return of the cash flow stream is Express the rate as a decimal fraction
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