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The following cash flows (in $000) are estimated for a business investment where $35,000 is initially invested. Year Cash Flow 0 -35 1 0 2
The following cash flows (in $000) are estimated for a business investment where $35,000 is initially invested.
Year | Cash Flow |
0 | -35 |
1 | 0 |
2 | 3 |
3 | 7 |
4 | 8 |
5 | 10 |
6 | 12 |
a. Calculate the net present value of this investment using a discount rate of 8%.
b. If other investment alternatives could earn 8%, should the investment described in the problem be undertaken?
c. Calculate the actual internal rate of return of this investment.
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