8) Cost $ 1,547 Perpetual cash flow $ 245 What is the interest rate on investment?

Question

Question

8)

Cost	$ 1,547
Perpetual cash flow	$ 245

What is the interest rate on investment?

Answer 1

Answer #1

Interest rate on perpetuity=Annual cash flows/cost of investment

=245/1547

which is equal to

=15.84%(Approx).

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Answer 2

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