Business, 14.11.2019 06:31 StupidFatChipmunk
The ceo first notices that he could always turn multiple negative cash flows into a single negative cash flow by adding all the negative cash flows together, getting that much money at time 0, and just holding onto it until he needs to make the payments. calculate the irr of the above cash flow stream if all the negative cash flows are moved to year 0. (10 points) b. the ceo also knows that he doesn’t have to just ‘hold on’ to the money at time 0, he can find a temporary fund to invest it and then withdraw money to pay for the negative cash flows. however, he’s not sure how well his investment will have to do to make the whole plan worthwhile. if the minimum attractive interest rate for the company is 10%, calculate what the temporary fund’s interest rate (annual effective) will have to be. (i. e. what fund interest rate makes the overall project have an irr of 10%)
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