Question

You have been offered a very long-term investment opportunity to increase your money one hundredfold. You...

You have been offered a very long-term investment opportunity to increase your money one hundredfold. You can invest $800 today and expect to receive $80,000 in 40 years. Your cost of capital for this (very risky) opportunity is 23%.

What does the IRR rule say about whether the investment should be undertaken? What about the NPV rule? Do they agree?

What is the IRR?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Ch 7 You have been offered a very​ long-term investment opportunity to increase your money one...
Ch 7 You have been offered a very​ long-term investment opportunity to increase your money one hundredfold. You can invest $ 1,000 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? What is the IRR​? The IRR of this investment opportunity is _______%
You have been offered a very long-term investment opportunity to increase your money one hundredfold. You...
You have been offered a very long-term investment opportunity to increase your money one hundredfold. You can invest $1,700 today and expect to $170,000 receive 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? The IRR of this investment is ;  (round to one decimal place. i.e. write "12.34%" as "12.3%".) According to IRR...
You have been offered a unique investment opportunity. If you invest $ 10 800 ​today, you...
You have been offered a unique investment opportunity. If you invest $ 10 800 ​today, you will receive $ 540 one year from​ now, $ 1 620 two years from​ now, and $ 10 800 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.9 % per​ year? Should you take the​ opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.9 % per​ year?...
You have been offered an opportunity to invest in a new hydrogen fuel-cell technology that is...
You have been offered an opportunity to invest in a new hydrogen fuel-cell technology that is cheap, efficient, and produces no carbon emissions. The initial cost is $55,000, and the project will payoff $1.4 million in 30 years. (a) Calculate the IRR of the project. If the cost of capital is 14 percent, would the IRR rule suggest you invest in this project? (b) Do the IRR rule and NPV rule agree? Explain.
You have been offered a unique investment opportunity. If you invest  $8,100 today, you will receive  $405 one...
You have been offered a unique investment opportunity. If you invest  $8,100 today, you will receive  $405 one year from now,  $1,215 two years from now, and $8,100 ten years from now. What is the NPV of the opportunity if the cost of capital is 1.2% per year?
You have been offered a unique investment opportunity. If you invest $11,700 ?today, you will receive...
You have been offered a unique investment opportunity. If you invest $11,700 ?today, you will receive $585 one year from? now, $1,755 two years from? now, and $11,700 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 6.7 % per? year? Should you take the? opportunity? b. What is the NPV of the opportunity if the cost of capital is 2.7 %per? year? Should you take it? now?
You have been offered a unique investment opportunity. If you invest 13,000 today, you will receive...
You have been offered a unique investment opportunity. If you invest 13,000 today, you will receive $650 one year from now, $1950 two years from now, and $13000 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 7.1% per year? Dhould you take the opportunity? b. What is the NPV of the opportunity if the cost of the capital is 3.1% per year? Should you take it now?
You have been offered a unique investment opportunity. If you invest $11,800 ?today, you will receive...
You have been offered a unique investment opportunity. If you invest $11,800 ?today, you will receive $590 one year from? now, $1,770 two years from? now, and $11,800 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 5.8 % per? year? Should you take the? opportunity? b. What is the NPV of the opportunity if the cost of capital is 1.8 %1.8% per? year? Should you take it? now?
You became very successful just recently and are looking for some promising investment. You have been...
You became very successful just recently and are looking for some promising investment. You have been offered the following investment opportunity in China: if you invest $18,000 today, you will receive $6,000 two years from now, $8,000 four years from now, and $8,000 six years from now. a) What is the NPV of the opportunity if the interest rate is 4% per year? Should you take this opportunity? b) What is the NPV of the opportunity if the interest rate...
Question #7: Your broker called and offered you the following investment opportunity: • You will have...
Question #7: Your broker called and offered you the following investment opportunity: • You will have to invest $1,000 today • In 7 years the investment will end and you will be paid $1,375 • You will receive no payments until the end of the investment in 7 years Required: Determine the Implied Interest rate that you will earn on this investment.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT