Question
Consider an investment with the following cash flows and net present value: Year 0 1 2 3 Cash Flow ($17,650.00) $4,500.00 $6,250.00 $10,400.00 Discount Rate
Consider an investment with the following cash flows and net present value:
| Year | 0 | 1 | 2 | 3 |
| Cash Flow | ($17,650.00) | $4,500.00 | $6,250.00 | $10,400.00 |
| Discount Rate | 8.00% | |||
| PV Factor | 1 | 0.92593 | 0.85734 | 0.79383 |
| ANCF |
|
|
|
|
| NPV: | $130.89 |
Using the above information, what is the maximum that can be paid for this to be a desirable investment assuming the discount rate listed above? That is, what is the breakeven cash flow for year 0? Round to nearest whole cent.
What is the minimum discounted cash flow in year 1 that you could accept and find the investment desirable?
What is the pre-discounted (raw) value?
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Public Finance A Contemporary Application Of Theory To Policy
Authors: David N Hyman
8th Edition
0324259700, 978-0324259704
