a. If the discount rate is 0%, what is the project's net present value? b.lf the discount rate is 5%, what is the project's net present value? c. What is this project's internal rate of return?

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
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1.Consider the project with the following
expected cash flows:
Yea Cash
r
flow
0 $200,00
1
+50,000
2
+50,000
3
$200,00
a.If the discount rate is 0%, what is the
project's net present value?
b.If the discount rate is 5%, what is the
project's net present value?
c. What is this project's internal rate of
return?
d.If the reinvestment rate is 5%, what is this
project's modified internal rate of return?
Transcribed Image Text:1.Consider the project with the following expected cash flows: Yea Cash r flow 0 $200,00 1 +50,000 2 +50,000 3 $200,00 a.If the discount rate is 0%, what is the project's net present value? b.If the discount rate is 5%, what is the project's net present value? c. What is this project's internal rate of return? d.If the reinvestment rate is 5%, what is this project's modified internal rate of return?
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