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The risk free rate is 5%. Risky Project Y has an NPV of $15, an IRR of 10%, requires an initial investment of Z at
The risk free rate is 5%. Risky Project Y has an NPV of $15, an IRR of 10%, requires an initial investment of Z at t = 0, and produces cash flows of $200 in the form of a growing perpetuity from t = 4 to t = infinity with growth rate of 3%. You write down an IRR equation so that you can solve for the value of Z: 200 1 A= -2 + B -3% (1 + C) In the equation above, what should the value of C be equal to? 200 10% none of the above 15 5% The risk free rate is 5%. Risky Project Y has an NPV of $15, an IRR of 10%, requires an initial investment of Z at t = 0, and produces cash flows of $200 in the form of a growing perpetuity from t = 4 to t = infinity with growth rate of 3%. You write down an IRR equation so that you can solve for the value of Z: 200 1 A = -2 + B - 3% (1 + C) In the equation above, what should the value of D be equal to? 4 3 5 0 1 none of the above
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