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An investment is expected to produce the following annual yearend cash flows The investment will cost $13000 today a Will this investment be profitable b What will be the IRR compounded

An investment is expected to produce the following annual year-end cash flows:

 

The investment will cost $13,000 today.

a. Will this investment be profitable?

b. What will be the IRR (compounded annually) on this investment?

c. Prove your answer in (b) by showing how much of each year’s cash flow is recovery of the $13,000 investment and how much of the cash flow is return on investment. (Hint: See Concept Box 3.2.)

 

Mar 30 2020 View more View Less

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