Since only one sign change occurs in the net cash flow series, the project is a simple investment, i.e. a unique rate of return (pure investment) W(i) = -2500000 +772500(P/A, i*, 15) + 80000(P/F, i*, 15) = 0 Solving for i i* = 34.46%
Since only one sign change occurs in the net cash flow series, the project is a simple investment, i.e. a unique rate of return (pure investment) W(i) = -2500000 +772500(P/A, i*, 15) + 80000(P/F, i*, 15) = 0 Solving for i i* = 34.46%
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. Since only one sign change occurs in the net cash flow series, the project is a simple
investment, i.e. a unique rate of return (pure investment)
PW (i) = -2500000 +772500(P/A, i*, 15) +80000(P/F, i*, 15) = 0
Solving for i
i* = 34.46%
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