PV, FV, annual rate of return, reversed cash flows.
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Spreadsheet is attached with set of cash flows.
a. If your required rate of return is 9% per year, what is the present value of the above cash flows? Future Value?
b. Suppose that you are offered another investment that is identical, except that the cash flows are reversed, is this worth more, or less, than the original investment? Why?
c. If you paid $50,000 for the original investment , what average annual rate of return would you earn? What return would you earn on the reversed cash flows?
d. Assuming that your required return is 9%, would you be willing to purchase either of these investments?
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Solution Summary
The solution computes PV, FV, annual rate of return, reversed cash flows with given set of cash flows.
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