EBK BUSN
11th Edition
ISBN: 9781337671736
Author: Kelly
Publisher: YUZU
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Chapter 10, Problem 5LO
Summary Introduction
To discuss: And compare the strategies used by investors to invest in securities.
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Students have asked these similar questions
Year
Free Cash Flow (FCF)
0
-$17,000,000
1
$4,980,000
2
$4,980,000
3
$4,980,000
4
$4,980,000
5
$6,980,000
The Net Present Value at a discount rate of 15%:
Present Value (PV) for each year:
PV(Year 1) = $4,980,000 ÷ (1 + 0.15)^1 = $4,330,435.
PV(Year 2) = $4,980,000 ÷ (1 + 0.15)^2 = $3,765,590.
PV(Year 3) = $4,980,000 ÷ (1 + 0.15)^3 = $3,274,426.
PV(Year 4) = $4,980,000 ÷ (1 + 0.15)^4 = $2,847,328.
PV(Year 5) = $6,980,000 ÷ (1 + 0.15)^5 = $3,477,617.
Sum of PVs = $4,330,435 + $3,765,590 + $3,274,426 + $2,847,328 + $3,477,617 = $17,695,396.
Initial Investment = $17,000,000.
NPV = Total PV - Initial Investment = $17,695,396 - $17,000,000 = $695,396.
Calculate The Internal Rate of Return
I am trying to find the accurate solution to this general accounting problem with the correct explanation.
Please provide the accurate solution to this financial accounting question using valid calculations.
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EBK BUSN
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