Question
5. Consider the following series of cash flowsYou invest $800 today and an additional investment of $500 three years from today.You expect to receive the
5. Consider the following series of cash flowsYou invest $800 today and an additional investment of $500 three years from today.You expect to receive the following cash flows:
End of Year 1 $200
End of Year 2 $200
End of Year 3 $500
End of Year 4 $600
A. If you assume a discount rate of 3%, how much does the value today of the benefits exceedthe value today of the costs?
B. What is the return on your investment?
A. 116
B. 7.9%
I don't understant how B is 7.9. Please use calculator terms to explain how you get your solution. Ex. N=5 PMT = I/YR=4.3% etc.
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