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The company has invested $320,000 in a business that is estimated to provide $75,000 in

The company has invested $320,000 in a business that is estimated to provide $75,000 in

Essentials Of Investments
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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The company has invested $320,000 in a business that is estimated to provide $75,000 in the first year, with annual increases of $5,000 for five years. income of $75,000 the first year, with annual increments of $5,000 for five years. At the end of this time, the assets remaining from the investment could be sold for $50,000. 50,000. If the investor's ARRR is 15% per year. Determine the NPV and IRR a) $127,895.10 y 41.30% b) $137,895.10 y 30.41% c) $127,895.10 y 30.41% d) N.A
Transcribed Image Text:The company has invested $320,000 in a business that is estimated to provide $75,000 in the first year, with annual increases of $5,000 for five years. income of $75,000 the first year, with annual increments of $5,000 for five years. At the end of this time, the assets remaining from the investment could be sold for $50,000. 50,000. If the investor's ARRR is 15% per year. Determine the NPV and IRR a) $127,895.10 y 41.30% b) $137,895.10 y 30.41% c) $127,895.10 y 30.41% d) N.A
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