Question
Consider a project that requires an initial investment of $100,000 and will produce a single cash flow of $150,000 in 5 years. a. What is
Consider a project that requires an initial investment of $100,000 and will produce a single cash flow of $150,000 in 5 years.
a. What is the NPV of this project if the 5-year interest rate is 5.0% (EAR)?
The NPV in this case EAR=5.0%) is $ ?????. (Round to the nearest dollar.)
b. What is the NPV of this project if the 5-year interest rate is 10.0% (EAR)?
The NPV in this case (EAR=10.0%) is $ ???. (Round to the nearest dollar.)
c. What is the highest 5-year interest rate such that this project is still profitable?
The highest EAR such that this project is still profitable is??? %.(Round to one decimal place.)
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Derivatives Markets
Authors: Robert L. McDonald
2nd Edition
032128030X, 978-0321280305
