13

doc

School

University of the Punjab *

*We aren’t endorsed by this school

Course

504

Subject

Finance

Date

Nov 24, 2024

Type

doc

Pages

1

Uploaded by Bawarrai

Report
[QUESTION] [Problem 13.3] The following are exercises on internal rates of return: a. An investment of $1,000 today will return $2,000 at the end of 10 years. What is its internal rate of return? b. An investment of $1,000 will return $500 at the end of each of the next 3 years. What is its internal rate of return? c. An investment of $1,000 today will return $900 at the end of 1 year, $500 at the end of 2 years, and $100 at the end of 3 years. What is its internal rate of return? d. An investment of $1,000 will return $130 per year forever. What is its internal rate of return? [ANSWER] a. 7.18 percent b. 23.38 percent c. 33.18 percent d. IRR = $130/$1,000 = 13 percent (a perpetuity)
Discover more documents: Sign up today!
Unlock a world of knowledge! Explore tailored content for a richer learning experience. Here's what you'll get:
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help