Instructions: Kindly answer this urgently. No hand written answer needed and also don.t use excel for answer. An investment requires an initial disbursement of € 2,500,000 and the duration of the project is 3 years, in the first of which it generates a cash flow of € 1,500,000, in the second € 3,700,000 and the third € 4,100,000. a) Calculate the Net Present Value of the investment, knowing that inflation is 3% cumulative annually and that the required profitability in the absence of inflation is 8%. b) Calculate the actual internal rate of return of the previous investment.
Instructions: Kindly answer this urgently. No hand written answer needed and also don.t use excel for answer. An investment requires an initial disbursement of € 2,500,000 and the duration of the project is 3 years, in the first of which it generates a cash flow of € 1,500,000, in the second € 3,700,000 and the third € 4,100,000. a) Calculate the Net Present Value of the investment, knowing that inflation is 3% cumulative annually and that the required profitability in the absence of inflation is 8%. b) Calculate the actual internal rate of return of the previous investment.
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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Transcribed Image Text:Instructions:
Kindly answer this urgently. No hand written answer needed and also don.t
use excel for answer.
An investment requires an initial disbursement of € 2,500,000 and the duration of
the project is 3 years, in the first of which it generates a cash flow of € 1,500,000,
in the second € 3,700,000 and the third € 4,100,000.
a) Calculate the Net Present Value of the investment, knowing that
inflation is 3% cumulative annually and that the required profitability
in the absence of inflation is 8%.
b) Calculate the actual internal rate of return of the previous
investment.
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