An investment requires 12,000 today and produces the first cash flow of 500 in three years (year
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Question:
| An investment requires 12,000 today and produces the first cash flow of 500 in three years (year 3). Cash flow is expected to grow at 2.5% a year after year 3. | ||
| a) What is the NPV of this investment if the discount rate is 8%? | ||
| NPV = | ||
| b) What is the rate of return of this investment? | ||
| Rate of return = | ||
Expert Answer:
a Year 3 cash flow 500 Market value at year 3 50010300800310300 present value 500... View the full answer
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