*SHOW ALL WORK USING AN EXCEL SPREADSHEET* Assume intrest rate is %8. 5 i. The p

Question

*SHOW ALL WORK USING AN EXCEL SPREADSHEET*

Assume intrest rate is %8.

5 i. The projected cash flows for an investment appear below. What is the investment's NPV? Year Cash flow - $200 50 75 110 110 80 Rate of Return Problems j. An investment of $1,300 today returns $61,000 in 50 years. What is the internal rate of return on this investment? k. An investment costs $900,000 today and promises a single payment of $11.5 million in 22 years. What is the promised rate of return, IRR, on this investment? 1. What return do you earn if you pay $22,470 for a stream of $5,000 payments lasting ten years? What does it mean if you pay less than $22,470 for the stream? More than $22,470? m. An investment promises to double your money in five years. What is the promised IRR on the investment? n. The projected cash flows for an investment appear below. What is the investment's IRR? Year 1 2 3 4 5 Cash flow —$460 – 28 75 280 190 160

Explanation / Answer

i) NPV(rate = 8%, 50...80) -200 = 133.22

j) RATE(50,0,-1300,61000,0) = 8.00%

k) RATE(22,0,0.9,-11.5,0) = 12.28%

l) RATE(10,5000,-22470,0,0) = 18.00%

m) RATE(5,0,-1,2,0) = 14.87%

n) IRR(-460...190) = 10.36%

i $133.22 j 8.00% k 12.28% l 18.00% m 14.87% n 10.36%

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