What does the irr rule say about whether the investment

Assignment Help Finance Basics
Reference no: EM132651216

You have been offered a very long term investment opportunity to increase your money one hundredfold. You can invest $1000 today and expect to receive $100,000 in 40 years. Your cost of capital for this (very risky) opportunity is 25%. What does the IRR rule say about whether the investment should be undertaken? What about the NPV rule? Do they agree?

Reference no: EM132651216

Questions Cloud

What is the npv of the investment opportunity : What is the NPV of the investment opportunity? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation
Calculate tax depreciation expense for each of five years : Calculate "tax" depreciation expense for each of the five years using the bonus depreciation allowed with the 2018 change to the tax code.
What is the appropriate discount rate : The effective interest rate is 10%. What is the appropriate discount rate used to derive the present value of the bonds on March 1, 2018
What is the irr of investment opportunity : What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 20%.
What does the irr rule say about whether the investment : What does the IRR rule say about whether the investment should be undertaken? What about the NPV rule? Do they agree?
What is the payback period : You expect that it will generate additional revenue of $500 per month. What is the payback period?
How much does franklin pay for the loan : Schroeder borrows 8500 dollars from Peppermint Patty at an effective rate of 4.9 percent, and agrees to make 9 equal annual payments
How should Nancy Corporation account for forfeited payment : Eddie Corporation made the first payment but did not make any other payments. How should Nancy Corporation account for forfeited payment
Find which could cause the price of : Find Which could cause the price of? Texas imposes a sales tax on Reeces but not Twix candy bars. Reeces production to rise. / Reeces to rise

Reviews

Write a Review

Finance Basics Questions & Answers

  What would its new share price be

Suppose the stock of Host Hotels & Resorts currently trading for $25 per share.

  Determining the international business

International business. Assume that you have the following information: Spot Rate: 16.5292 Yen/Yuan OneYear Forward Exchange Rate: 15.1418 Yen/Yuan

  Formula for calculating the betas for a company

Formula for calculating the betas for a company, using monthly returns and the expected return for a company, using the CAPM.

  Calculate the net present value-payback

Using a 5% discount rate, calculate the Net Present Value, Payback, Profitability Index, and IRR for each of the investment projects below (note, the inflows are for each year). Based on your calculations rank the projects and support you answer.

  How does the tax treatment of dividend income

How does the tax treatment of dividend income by the corporation moderate the effects of double taxation?

  Construct a traditional financial institution balance sheet

Based on the following information, construct a traditional financial institution balance sheet AND a balance sheet including off-balance sheet items. What is the difference between credit risk and sovereign risk? Name one way to control each

  According to the prevalence of disease

How does the predictive value of a screening test vary according to the prevalence of disease

  How much money will you receive for the mature bond

In the market there are 5-year zero coupon bonds with a yield of 4%, How much money will you receive for the mature bond

  Explain how you could use pivot tables

Explain how you could use pivot tables to see which demographics are the primary drivers of their "yes/no" buying behavior.

  Nominal and ordinal categorical data

What is the main difference between nominal and ordinal categorical data?

  What is the impact of the program objective

What is the impact of the program objective memorandum document with respect to fiscal guidance

  Impact of revenue sources and expenditures on budget

Explain the impact of revenue sources and expenditures on budget building. Minimum of 250 words with a scholarly reference.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd