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-   -   Trying to find initial investment with cash flows and rate of return (https://www.askmehelpdesk.com/showthread.php?t=346990)

  • Apr 27, 2009, 09:45 PM
    Depp89
    Trying to find initial investment with cash flows and rate of return
    There is an opportunity to invest in a 2 year project with cash flows of $100,000 in year one and $200,000 in year two. The required rate of return is 20% and the question wants to know the maximum amount you should be willing to initially invest

    The answer is $222,100 but I can't figure out how they got it using the present value interest factors:confused:
  • Apr 28, 2009, 03:54 AM
    ROLCAM

    The actual answer is as follows :- $222,222.22

    First Part

    100,000.00/1.2 83,333.33 83,333.33

    Second Part

    200,000.00/1.2 166,666.67

    166,666.67/1.2 138,888.89 138,888.89

    ________________________________________________

    TOTAL TWO PARTS ********************222,222.22

    =====================================
  • Dec 11, 2011, 12:04 PM
    asmaaok
    What is the initial investment if the amount continuous money flow over 30 years at an interest rate of 95 compounded continuously will be 40000

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