Problem

Consider the following project: Period 0123Net cash flow−100078.5578.55The internal rate...

Consider the following project:

Period

 

0

1

2

3

Net cash flow

−100

0

78.55

78.55

The internal rate of return is 20%. The NPV, assuming a 20% opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year.

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Solutions For Problems in Chapter 12