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Question 2, 10 Marks. Consider the following annual cash flows: Period Cash Inflow Cash Outflow 000 1 24000 5000 2 24000 5000 3 24000 5000

Question 2, 10 Marks. Consider the following annual cash flows:

Period Cash Inflow Cash Outflow 000

  1. 1 24000 5000

  2. 2 24000 5000

  3. 3 24000 5000

  4. 4 24000 5000

  5. 5 24000 5000

  6. 6 28000 6500

  7. 7 30000 5700

  8. 8 34000 8300

  9. 9 37000 8500

10 50000 9000

a) Using an annual effective discount rate of 10%, what is the PV? (5 Marks) b) If I pay $100,000 for this cash flow, what will be the NPV and IRR? (5 Marks)

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