EXAMPLE 18 Compute the rate of return for the investment represented by the following cash flow:...

Question

Question

business economics

Answer 1

Answer #1

Rate of return = r

Equating the present value of future cash flows:

595 = 250/(1 + r) + 200/(1 + r)² + ... + 50/(1 + r)⁵

r = 13.45%

Answer 2

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