Question
2a. Over a two year time horizon an investor experiences the following net cash flows: Year 0 1 2 Cash flow -$8,000 $5,280 $5,320 What
- 2a. Over a two year time horizon an investor experiences the following net cash flows:
| Year | 0 | 1 | 2 |
| Cash flow | -$8,000 | $5,280 | $5,320 |
What is the internal rate of return for the investor?
Demonstrate that a bank deposit offering an annual rate equal to the internal rate of return can replicate the above set of cash flows for the investor.
(7 marks)
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Finance A Quantitative Introduction
Authors: Nico Van Der Wijst
1st Edition
1107029228, 978-1107029224
