Question
please use python to solve The management is presented with the following mutually exclusive investment proposals; Proposal A: Cost of investment($) is 800, net cash
please use python to solve
The management is presented with the following mutually exclusive investment
proposals;
Proposal A:
Cost of investment($) is 800, net cash flow at end of year 1 is 500, and net cash flow at end of year 2 is 600
Proposal B:
Cost of investment($) is 600, net cash flow at end of year 1 is 500, and net cash flow at end of year 2 is 400
The company believes that both proposals will have a return of 5%. Use your python codes to calculate the NPVs with the company expectation 5% and also to find the internal rate of return (IRR) of two investments. (use Secant metod) We will use x0 = 0 and x1 = 0.5 as our initial approximations. We will let the two tolerance values step = 0.0001 and abs = 0.0001 and we will stop after a maximum number of iterations N=50.
please show the python code,thanks
You can use secand method to do x0=0 and x1=0.5,. ' Initial guess: a_0=x0=0, b_0=x1=0.5, for n in range(1,50): m_n = a_n - f(a_n)*(b_n - a_n)/(f(b_n) - f(a_n))'
Here is the reference to calcuate IRR and NPV using secant method
https://www.researchgate.net/publication/286797258_Improvements_on_secant_method_for_estimating_Internal_Rate_of_Return_IRR
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