The net present value f

Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 2CMA: Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of...
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Question Five
a) An investor is interested in a certaim project with an initial outlay of $10, 000 and
produces the following cash flows at the end of each year.
Year
1
3
4
Cash flow
$5,000
$3,000
$3,000
$5,000
$1,000
Calculate:
The internal rate of return for the project.
The net present value for the project at j, = 15%.
b) A $5000 callable bond pays interest at j2 = 9.5% and matures at
i.
ii.
par
in 20
years.
It may
be called at the end of 10 to 15 years (all inclusive) for $5200. Find the price to yield at
least j2 = 8.5% until the redemption.
n- mxt
(1+i)"
16,000
n= Mxt
Transcribed Image Text:the enu Question Five a) An investor is interested in a certaim project with an initial outlay of $10, 000 and produces the following cash flows at the end of each year. Year 1 3 4 Cash flow $5,000 $3,000 $3,000 $5,000 $1,000 Calculate: The internal rate of return for the project. The net present value for the project at j, = 15%. b) A $5000 callable bond pays interest at j2 = 9.5% and matures at i. ii. par in 20 years. It may be called at the end of 10 to 15 years (all inclusive) for $5200. Find the price to yield at least j2 = 8.5% until the redemption. n- mxt (1+i)" 16,000 n= Mxt
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