Consider the following project: Net cash flow -215 1 Change in value (economic depreciation) Expected economic income Period 2 90.55 3 246.40 The internal rate of return is 18%. The NPV, assuming a 18% opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Period 2 3

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Consider the following project:
Net cash flow
0
-215
1
Change in value (economic depreciation)
Expected economic income
0
Period
2
90.55
3
246.40
The internal rate of return is 18%. The NPV, assuming a 18% opportunity cost of capital, is exactly zero. Calculate the expected
economic income and economic depreciation in each year. (Negative answers should be indicated by a minus sign. Do not round
intermediate calculations. Round your answers to 2 decimal places.)
Period
2
3
Transcribed Image Text:Consider the following project: Net cash flow 0 -215 1 Change in value (economic depreciation) Expected economic income 0 Period 2 90.55 3 246.40 The internal rate of return is 18%. The NPV, assuming a 18% opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Period 2 3
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