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The following cash flows of a project is given: Cash flow component/Years 1 2 3 4 5 6 Cash proceeds 300 400 500 Cash outlays
The following cash flows of a project is given:
Cash flow component/Years | 1 | 2 | 3 | 4 | 5 | 6 |
Cash proceeds |
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| 300 | 400 | 500 |
Cash outlays | - 100 | -120 | -130 |
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|
Discount rates for positive and negative cash flows are 10% and 6% respectively.
Calculate the composite discount rate and use it as the hurdle rate for the rest of the problem.
Calculate the present value of the project using the component cash flow procedure.
Calculate the present value of the project using the project cash flow procedure.
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