Solved Question: Investment opportunity as follows: Year 0, unknown cash flow
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Investment opportunity as follows: Year 0, unknown cash flow, Year 1 = 200 cash flows,,Year 2 = 400 cash flow, Year 3 = -100 cash flow, year 4= 500 cash flow, Year 5 = 200 cash flow
a. If other investments with comparable risk are earning 12% then how much should you be willing to pay for this investment?
b. If you purchase it for 800 then what is the annual rate of return on the investment?
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