Question
A firm invests $450 in a project that is expected to generate 15% return on its beginning of period book value each year for 3
A firm invests $450 in a project that is expected to generate 15% return on its beginning of period book value each year for 3 years. The discount rate =12%.
The asset is depreciated at the rate of two-thirds [depreciation rate = 2/3].
- Compute PRI (the value added) using RI valuation model
- Compute NPV (the value added) using the FCF valuation model
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Public Finance
Authors: Steven G. Medema, Carl Sumner Shoup
1st Edition
0202307859, 978-0202307855
