The table below is the estimated net cash flow for a fishing project. The shareholders are prepared to have a cut off point of 7 years. Year Net Cash Flow 1 2 اليا - 3 64 5 6 7 20 140 260 850 1000 740 600 • 000) The initial capital required for the project is $ 1,950,000. The cost of capital is 12%.
The table below is the estimated net cash flow for a fishing project. The shareholders are prepared to have a cut off point of 7 years. Year Net Cash Flow 1 2 اليا - 3 64 5 6 7 20 140 260 850 1000 740 600 • 000) The initial capital required for the project is $ 1,950,000. The cost of capital is 12%.
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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IRR:
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The table below is the estimated net cash flow for a fishing project. The shareholders are prepared to
have a cut off point of 7 years.
Year Net Cash Flow (000)
1
20
2
140
3
260
64
850
5
1000
6
740
7
600
The initial capital required for the project is $ 1,950,000. The cost of capital is 12%.
Expert Solution
Step 1
IRR
IRR The method that helps investors to calculate the rate of return of a project is known as IRR. The project can be selected only when the IRR rate is greater than the cost of capital
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