Calculate the market value of project

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Exercise 1: Consider an investment project financed at the cost of capital of 14%, with the following expected cash flows:

a) Calculate the market value of this project.

b) Calculate the NPV. Would you accept this project?

c) Can we affirm that the return on this project is 17.5%? Explain your reasoning.

d) What is the MIRR?

Exercise 2: You are thinking of investing in the 5-year bond, with 10% coupon, and 1,000 € nominal, which is trading at par. You plan to hold the bond for three years (i.e. sell the bond in the moment in time 3) and to reinvest the coupon payments received from this bond. If the reinvestment and discount rate drop to 5% after you buy the bond what is the rate of return per annum that you would obtain?

Reference no: EM133072781

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