Suppose that we make contributions to a fund of $125 today and $750 in two years for a return of $1000 in one year. First write the Net Present Value as a function of the discount factor ν. Secondly, use the NPV to calculate the yield rate of this investment (select the larger value for i. Finally, explain whether or not this is a good investment for us.
Suppose that we make contributions to a fund of $125 today and $750 in two years for a return of $1000 in one year. First write the Net Present Value as a function of the discount factor ν. Secondly, use the NPV to calculate the yield rate of this investment (select the larger value for i. Finally, explain whether or not this is a good investment for us.
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 8P
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Suppose that we make contributions to a fund of $125 today and $750 in two
years for a return of $1000 in one year. First write the
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