Question
1.Consider an investment which has the following cash flows: Year Cash flow ($) 0 (31,000) 1 10,000 2 20,000 3 10,000 4 10,000 5 5,000
1.Consider an investment which has the following cash flows:
Year
Cash flow ($)
0
(31,000)
1
10,000
2
20,000
3
10,000
4
10,000
5
5,000
Compute the: (a) payback period; (b) NPV at 14 percent cost of capital; and (c) IRR. Based on (b) and (c), make a decision about the investment. Should it be accepted or not? Why or why not?
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
9th Edition
0134519264, 9780134519265
