A friend of yours has offered to let you in on a limited partnership to open a new video arcade. He wants you to invest $50,000 now for a 10% partnership and he has projected the following cash flows for your returns. You have asked around and believe the appropriate discounting rate is 16%. What is the net present value of this opportunity? Cash flow Year 1 0 Year 2 0 Year 3 $20,000 Year 4 $20,000 Year 5 $70,000 When he buys out your share
A friend of yours has offered to let you in on a limited partnership to open a new video arcade. He wants you to invest $50,000 now for a 10% partnership and he has projected the following cash flows for your returns. You have asked around and believe the appropriate discounting rate is 16%. What is the net present value of this opportunity? Cash flow Year 1 0 Year 2 0 Year 3 $20,000 Year 4 $20,000 Year 5 $70,000 When he buys out your share
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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A friend of yours has offered to let you in on a limited partnership to open a new video arcade. He wants you to invest $50,000 now for a 10% partnership and he has projected the following cash flows for your returns. You have asked around and believe the appropriate discounting rate is 16%. What is the
| Cash flow | ||
| Year 1 | 0 | |
| Year 2 | 0 | |
| Year 3 | $20,000 | |
| Year 4 | $20,000 | |
| Year 5 | $70,000 | When he buys out your share |
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