O IT WITH EXCEL FORMULA A company is planning to start an investment, which will cost an initial investment of $ 215 million. The management has already forecasted all future cash flows from this project: $55 million each year in the first 3 years, $50 million in the last 4 years. At the end of year 4 the machine has to be revised, which will cost $65 million. The investment (machinery etc) will be sold at the end of year 7 for a price of $45 million. a) Calculate the Internal Rate of Return. b) Given a MARR of 13% annual nominal, compounded annually: should the company accept this investment or not? ANSWER 12.596%
O IT WITH EXCEL FORMULA A company is planning to start an investment, which will cost an initial investment of $ 215 million. The management has already forecasted all future cash flows from this project: $55 million each year in the first 3 years, $50 million in the last 4 years. At the end of year 4 the machine has to be revised, which will cost $65 million. The investment (machinery etc) will be sold at the end of year 7 for a price of $45 million. a) Calculate the Internal Rate of Return. b) Given a MARR of 13% annual nominal, compounded annually: should the company accept this investment or not? ANSWER 12.596%
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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DO IT WITH EXCEL FORMULA
A company is planning to start an investment, which will cost an initial investment of $ 215 million. The management has already forecasted all future cash flows from this project: $55 million each year in the first 3 years, $50 million in the last 4 years. At the end of year 4 the machine has to be revised, which will cost $65 million. The investment (machinery etc) will be sold at the end of year 7 for a price of $45 million. a) Calculate the Internal Rate of Return . b) Given a MARR of 13% annual nominal, compounded annually: should the company accept this investment or not?
ANSWER
12.596%
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