Question 4 a) Consider the following cash flow diagram. What is the value of X i

Question

Question 4 a) Consider the following cash flow diagram. What is the value of X if the rate of return is 15%? $400 (3 marks) b) Consider the following "present worth versus interest rate" graph for a well behaved investment. If the interest rate at B is 20%, then which of the following best describes the analysis or the investment ii, iii, iv. the IRR of the investment is less than 20% the IRR of the investment is equal to 20% the IRR ofthe investment is greater than 20% none of the above are true

Explanation / Answer

a)use the below formuale.
400=x/1.15+(x/1.15^2)
X=246
b)Option iii since the interest rate zero at point greather than B

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.