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Turner Video will invest $72, 500 in a project. The firm's cost of capital is 6 percent. The investment will provide the following inflows. Use
Turner Video will invest $72, 500 in a project. The firm's cost of capital is 6 percent. The investment will provide the following inflows. Use Appendix A for an approximate answer but calculate your final answer using the formula and financial calculator methods. The internal rate of return is 25 percent. If the investment assumption of the net present value method is used, what will be the total value of the inflows after five years? (Assume the inflows come at the end of each year.) Total value of inflows $ If the reinvestment assumption of the internal rate of return method is used, what will be the total value of the inflows after five years? Total value of inflows $ Which investment assumption is better? Reinvestment assumption of IRR Reinvestment assumption of NPV
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