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1 2 Growth rate 3 Discount rate 4 A B F NPV, DISCOUNT AND GROWTH RATES 10% 15% $500 $100 Initial Cost Cash flow at the end of Year 1 5 6 Number of years 7 8 Year 9 Cash flow 0 1 D 2 E 3 4 G 5

1 2 Growth rate 3 Discount rate 4 A B F NPV, DISCOUNT AND GROWTH RATES 10% 15% $500 $100 Initial Cost Cash flow at the end of Year 1 5 6 Number of years 7 8 Year 9 Cash flow 0 1 D 2 E 3 4 G 5

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Compute the cash flows for the project. Use the Data Table function to do a two-way sensitivity analysis on the NPV of the project, varying the discount rates from even percentages 0%, 2%, 4%, 6%, 8% ..., 20% vertically and varying the growth rates from 0%, 2%, 4%, ..., 12% horizontally. Please label the discount rate and growth rate in your data table. Use the table below to help.
1 2 Growth rate Discount rate 3 4 Initial Cost A B F NPV, DISCOUNT AND GROWTH RATES 10% 5 Cash flow at the end of Year 1 6 Number of years 7 8 Year 9 Cash flow 15% $500 $100 5 0 1 D 2 E 3 4 5 H
Transcribed Image Text:1 2 Growth rate Discount rate 3 4 Initial Cost A B F NPV, DISCOUNT AND GROWTH RATES 10% 5 Cash flow at the end of Year 1 6 Number of years 7 8 Year 9 Cash flow 15% $500 $100 5 0 1 D 2 E 3 4 5 H
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