4. An investment requires an initial disbursement of € 2,500,000 and the duration of the project is 3 years, in the first of which it generates a cash flow of € 1,500,000, in the second € 3,700,000 and the third € 4,100,000.
Calculate the actual internal rate of return of the previous investment
Calculating discounting rate adjuted with inflation= (1+ discount rate) (1+ inflation rate) | |||||||
(1+ .08)(1+.03) | |||||||
1.1124 | |||||||
Therefore discounting rate will be 11.24% | |||||||
Calculating NPV | |||||||
Particulars | Amount | PVF | Present value | ||||
Initial investment | 2500000 | 1 | 2500000 | ||||
Year1 | 1500000 | 0.899 | 1348500 | ||||
Year2 | 3700000 | 0.808 | 2989600 | ||||
Year3 | 4100000 | 0.726 | 2976600 | ||||
Net present value | 4814700 | ||||||
4. An investment requires an initial disbursement of € 2,500,000 and the duration of the project...
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