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What is the rate of return for the following incremental analysis. Investment 1 Initial Investment $23,877 $31,255 Annual Return $3,134 $10,237 Salvage Value $23,877 $31,255

What is the rate of return for the following incremental analysis. Investment 1 Initial Investment $23,877 $31,255 Annual Return $3,134 $10,237 Salvage Value $23,877 $31,255

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
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What is the rate of return for the following incremental analysis. Investment 1 2 Initial Investment $23,877 $31,255 Annual Return $3,134 $10,237 Salvage Value $23,877 $31,255 32.75 AV Recall that if Present Value = Salvage Value, PV For the incremental analysis the rate of return is Ai* = AAV - AV2 - AV1 PV2 - PV1 ΔΡ Rate of Return = Ai'2 -1× 100 * Note: rate of return can be negative too.
Transcribed Image Text:What is the rate of return for the following incremental analysis. Investment 1 2 Initial Investment $23,877 $31,255 Annual Return $3,134 $10,237 Salvage Value $23,877 $31,255 32.75 AV Recall that if Present Value = Salvage Value, PV For the incremental analysis the rate of return is Ai* = AAV - AV2 - AV1 PV2 - PV1 ΔΡ Rate of Return = Ai'2 -1× 100 * Note: rate of return can be negative too.
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