Question
part 1 Maria has two options to invest $1 850 000. She could buy shares that earn 10% annually. Or, she could in a project
part 1
Maria has two options to invest $1 850 000. She could buy shares that earn 10% annually. Or, she could in a project that brings her $150 000 per year in revenues. Compare the two options in terms of their internal rates of return?
part 2
What are the external rate of return and the approximate external rate of return for a project that pays you $5 100 at the end of the first year, costs $11 000 by the end of the second year and brings $5 000 next year. Note that the current market interest rate is 25%? Support your answer with cash flow diagram.
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