Project A has a net present value of zero when the discount factor of 20% is used. How much return is the project earning? B. If project A above is earning K150, 000 per year in perpetuity, what is the initial investment cost of the project?  C. Company A expects to generate K150, 000 cash flows per year in perpetuity and the risk adjusted discount rate is 20%. What should be the certainty equivalent cash flows when the risk free rate is 10%

ENGR.ECONOMIC ANALYSIS
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A. Project A has a net present value of zero when the discount factor of 20% is used. How much return is the project earning?
B. If project A above is earning K150, 000 per year in perpetuity, what is the initial investment cost of the project? 
C. Company A expects to generate K150, 000 cash flows per year in perpetuity and the risk adjusted discount rate is 20%. What should be the certainty equivalent cash flows when the risk free rate is 10%

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Introduction

The time value of money refers to the concept that a sum of money value is more now than the same sum will be at a future date due to its earning ability in the interim.

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