QUESTION 2 An investor invests $40,000 today, in exchange for continuous cash flows of $15,000 per year for 3 years. a) Calculate the NPV of this investment at an annual effective hurdle rate of 5%. b) Calculate the annual effective dollar-weighted rate of return for this investment (either exactly or using the approximation) c) Calculate the discounted payback period for this investment at an annual effective hurdle rate of 5%.

QUESTION 2 An investor invests $40,000 today, in exchange for continuous cash flows of $15,000 per year for 3 years. a) Calculate the NPV of this investment at an annual effective hurdle rate of 5%. b) Calculate the annual effective dollar-weighted rate of return for this investment (either exactly or using the approximation) c) Calculate the discounted payback period for this investment at an annual effective hurdle rate of 5%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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