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
Related questions
Question
Problem 1. What is the estimated rate of return for n this project

Transcribed Image Text:Prob. 1
The cash flow for a business is shown below. What is the estimated
rate of return on this project.
in
Cash Flow
-1600
1
1500
2
1500
3
-400
4
700
-300
600
7
-150
Rate of Return =
Prob. 2
A company is building a powerplant. It is considering three
alternatives. Based on Benefit to cost ration, determine which
project should be chosen. The estimated benefits and costs are as
follows
A
C
Initial Investment
100
160
220
Annual Recurring benefits
20
25
55
Annual Recurring costs
8.
18
25
Salvage value
10
8.
22
Dreiect R
Select Daiect-
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