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    Depp89's Avatar
    Depp89 Posts: 1, Reputation: 1
    New Member
     
    #1

    Apr 27, 2009, 09:45 PM
    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:
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
    Ultra Member
     
    #2

    Apr 28, 2009, 03:54 AM

    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

    =====================================
    asmaaok's Avatar
    asmaaok Posts: 1, Reputation: 1
    New Member
     
    #3

    Dec 11, 2011, 12:04 PM
    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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