Time Value Money

4) Assume an investment is for sale at $100,000 and has the following income stream each year (Year 5 includes rent and a terminal sale) (Place your timeline here if you are using one) (Each part worth 1 pt) $20,000 Year 1 -$40,000 2. $20,000 3 $30,000 $140,000 4 Year 5 a) What is the IRR if you invest in this project? CFO FO1 c01 FO2 CO2 F03 CO3 FO4 CO4= FOS= CO5 b) What is the NPV if your discount rate is 10 percent? Should you invest? (Your CFs should not change) What is the NPV if your discount rate is 12 percent? Should you invest? c) d) What is the maximum price you would be willing to pay for the cash flows if your discount rate is 13 percent? (HINT: One CF should change)