Question
Show work and answer correctly for thumbs up! For an initial investment of $10,000, you are...
Show work and answer correctly for thumbs up!
For an initial investment of $10,000, you are offered the opportunity to receive $4,000 at the end of the year for the next 10 years. What is the irr of this opportunity? $16,840 o need to know the cost of capital O 38.45% O 8%
Answers
Let irr be x%
At irr,present value of inflows=present value of outflows.10,000=4000/1.0x+4000/1.0x^2+.................+4000/1.0x^10
Hence x=irr=38.45%(Approx).
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