A) You are offered to invest in a project the total amount of $250,000. At the e
ID: 2781116 • Letter: A
Question
A) You are offered to invest in a project the total amount of $250,000. At the end of the first year this project will have a cash flow of $145,000 and at the end of the second year this project will have a cash flow of $152,000 , this is the last year of this project. Calculate the yield for this investment.
B) Your company have decided to issue a green bond in order to finance a new project using clean technologies. This bond will have a face value of M$1,000 and will have a maturity of three years with a coupon rate of 10% which is paid at the end of each year. If the yield used by investors for this kind of projects in similar companies is 8%. Which will be the price in the market for this bond?
Explanation / Answer
a)
Use iRR function in Excel
yield on the investment = 12.1925%
B)
FV = 1000
PMT = 100
N = 3
rate = 8%
use PV function in Excel
price of the bond = 1051.54
Cash flows Year (250,000.00) 0 145,000.00 1 152,000.00 2Related Questions
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