Question
Suppose you are offered $7,500 today but must make the following payments: Year Cash Flows ($) 0 $ 7,500 1 4,200 2 2,900 3 2,000
| Suppose you are offered $7,500 today but must make the following payments: |
| Year | Cash Flows ($) | ||
| 0 | $ 7,500 | ||
| 1 | 4,200 | ||
| 2 | 2,900 | ||
| 3 | 2,000 | ||
| 4 | 1,300 | ||
| a. | What is the IRR of this offer? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| b. | If the appropriate discount rate is 12 percent, should you accept this offer? |
|
| c. | If the appropriate discount rate is 24 percent, should you accept this offer? |
|
| d-1. | What is the NPV of the offer if the appropriate discount rate is 12 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| d-2. | What is the NPV of the offer if the appropriate discount rate is 24 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
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Economics Of Money Banking And Financial Markets
Authors: Frederic Mishkin
5th Edition
0134734203, 978-0134734200
