You are considering an investment opportunity that will generate a cash flow of $150,000 per year...
You are considering an investment opportunity that will generate a cash flow of $150,000 per year every year in perpetuity. The first cash-flow of $150,000 is one year from now (t = 1). How much are you willing to invest today (t = 0) if you want to have an internal rate of return (IRR) of 18%? Please show how to do without excel or calculator
Homework Answers
Present value = Perpetual cash flow / IRR
Present value = $150,000 / 0.18
Present value = $833,333.333
You are willing to invest $833,333.333
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