The following cash flows (in $000) are estimated for a business investment where $35,000 is initially...

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The following cash flows (in $000) are estimated for a business investment where $35,000 is initially...

The following cash flows (in $000) are estimated for a business investment where $35,000 is initially invested.

Year	Cash Flow
0	-35
1	0
2	3
3	7
4	8
5	10
6	12

a. Calculate the net present value of this investment using a discount rate of 8%.

b. If other investment alternatives could earn 8%, should the investment described in the problem be undertaken?

c. Calculate the actual internal rate of return of this investment.

business accounting

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Answer 1

Answer #1

০ © ड = % 1 ७ गo0) ५४ CF DCE PVE@y DCF ३5 1 -35 1 -35 ০.৭) ০.৭२5१ 85५3 ১ ০ 2 २.541१ .৭426 २-१2 78 6. ५०59 ০.৭5। ,११६ .108 १. A. The net present value = ($ 6.6231) - Negative

B. If the other investments could earn 8%, then the investment described in the problem should not be undertaken.

C. Actual internal rate of return is around 3% as per the above calculations.

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Answer 2

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