If all the negative cash flows are moved to year 0. If the minimum attractive interest rate for the company is 10%, calculate what the temporary fund’s interest rate (annual effective) will have to be. (i.e. what fund interest rate makes the overall project have an IRR of 10%) Time Cash Flow A Year 0 $-4000 Year 1 $-2000 Year 2 $2000 Year 3 $400 Year 4 $8000 Year 5 $-2000
If all the negative cash flows are moved to year 0. If the minimum attractive interest rate for the company is 10%, calculate what the temporary fund’s interest rate (annual effective) will have to be. (i.e. what fund interest rate makes the overall project have an IRR of 10%) Time Cash Flow A Year 0 $-4000 Year 1 $-2000 Year 2 $2000 Year 3 $400 Year 4 $8000 Year 5 $-2000
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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If all the negative cash flows are moved to year 0. If the minimum attractive interest rate for the company is 10%, calculate what the temporary fund’s interest rate (annual effective) will have to be. (i.e. what fund interest rate makes the overall project have an IRR of 10%)
Time | Cash Flow A |
Year 0 | $-4000 |
Year 1 | $-2000 |
Year 2 | $2000 |
Year 3 | $400 |
Year 4 | $8000 |
Year 5 | $-2000 |
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