The Hudson Corporation makes an investment of $44,400 that provides the following cash flow: Year 1 2 3 Cash Flow $ 24,000 24,000 12,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What is the net present value at a discount rate of 12 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places. Net present value b. What is the internal rate of return? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return % c. Would you make the same decision under both parts a and b?
The Hudson Corporation makes an investment of $44,400 that provides the following cash flow: Year 1 2 3 Cash Flow $ 24,000 24,000 12,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What is the net present value at a discount rate of 12 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places. Net present value b. What is the internal rate of return? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return % c. Would you make the same decision under both parts a and b?
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:The Hudson Corporation makes an investment of $44,400 that provides the following cash flow:
Year
1
2
3
Cash Flow
$ 24,000
24,000
12,000
Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator
methods.
a. What is the net present value at a discount rate of 12 percent?
Note: Do not round intermediate calculations and round your answer to 2 decimal places.
Net present value
b. What is the internal rate of return?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
Internal rate of return
%
c. Would you make the same decision under both parts a and b?
O Yes
O No
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