Question
Given the following cash flow Year 0 Years 1-2 Years 3-10 Years 11-15 -$8,000 -$3,000/year $6,500 in year 3 and increases annually by 8%thereafter
Given the following cash flow Year 0 Years 1-2 Years 3-10 Years 11-15 -$8,000 -$3,000/year $6,500 in year 3 and increases annually by 8%thereafter -$12,000/year Examine if it is using a discount rate of 10%, compute the following items: a) (4 pts) Present worth b) (4 pts) Future worth c) (4pts) Equivalent annual worth d) (8 pts) Internal rate of return (show all if there are multiple) e) (4 pts) Modified internal rate of return at a 8% borrowing and 12% reinvestment rate f) (8 pts) RIC at a 10% reinvestment rate g) (4 pts) Payback period (non-discounted) h) (4 pts) Payback period (discounted at discount rate)
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SOLUTION a Present worth The present worth of the cash flows is the amount of money that would be required today to generate the same amount of cash in the future taking into account the time value of ...Get Instant Access to Expert-Tailored Solutions
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
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