Cost of preference equity-irr , Financial Management

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1.  Find out the present value of Rs. 10,000 to be required after 4 years if the interest rate is 6%.

2.  A Firm can invest Rs. 10,000 in a project with a life of three years.

The projected cash inflow are as follows:

Year

1

2

3

Cash inflows(Rs.)

4,000

5,000

4,000

The cost of capital is 10 % p.a. Should the investment be made ?

[ Hint :  DCF @ 10%, for 1st year =0.909, for IInd year = 0.826, IIIrd Year = 0.751 ]

 Write short notes on the following:

3.  IRR 

4.  Cost of preference Equity

 


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