Question

You plan to invest $150,000 in a retail business. The projected 10-year cash flows are as follows:
Year 1 ............ $20,000
Year 2 ............ $21,000
Year 3 ............ $22,000
Year 4 ............ $24,000
Year 5 ............ $30,000
Year 6 ............ $35,000
Year 7 ............ $40,000
Year 8 ............ $45,000
Year 9 ............ $50,000
Year 10 ........... $55,000
In the 10th year, the business will be sold for $100,000. The cost of capital is 12%.
Use this information to calculate the following for the project:
a) Present value
b) Net present value
c) Internal rate of return



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  • CreatedDecember 03, 2014
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