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Two cashflows A and B consist of three payments at t = 0, 1, 2 where t is in years. CashflowAisC0A =1, C1A =3.2, C2A
Two cashflows A and B consist of three payments at t = 0, 1, 2 where t is in years. CashflowAisC0A =1, C1A =3.2, C2A =1.2whilecashflowBisC0B =2, C1A = 5.35, C2A = .045. Find the effective annual interest rates where the NPV of cashflow A is larger than the NPV of cashflow B (assuming we use the same rate for both cashflows!)
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