Project A has a net present value of zero when the discount factor of 20% is used. How much return is the project earning? If project A above is earning K150, 000 per year in perpetuity, what is the initial investment cost of the project? 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%
Project A has a net present value of zero when the discount factor of 20% is used. How much return is the project earning? If project A above is earning K150, 000 per year in perpetuity, what is the initial investment cost of the project? 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%
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
Problem 5.4IP
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