# Turner Video will invest $76,344 in a project. The firms cost of capital is 10 percent. The investment will provide

## Question:

Turner Video will invest $76,344 in a project. The firm’s cost of capital is 10 percent. The investment will provide the following inflows:

The internal rate of return is 11 percent.

a. If the reinvestment assumption of the net present value method is used, what will be the total value of the inflows after five years? (Assume the inflows come at the end of each year.)

b. If the reinvestment assumption of the internal rate of return method is used, what will be the total value of the inflows after five years?

c. Generally is one investment assumption likely to be better than another?

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## Step by Step Answer:

**Related Book For**

## Foundations Of Financial Management

**ISBN:** 9781264097623

18th Edition

**Authors:** Stanley Block, Geoffrey Hirt, Bartley Danielsen

**Question Details**

Chapter #

**12**- The Capital Budgeting DecisionSection: Problem

Problem: 20

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