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Q. A project requires an investment of $25000 ,expected to generate inflow of $8000 for 5 years (first receipt in one year time) cost of capital is 10% , sensitivity to change of cash inflows each year ?
what I did was first NPV = year 0= (25000) X 1 = (25000) and year 2-6, 8000X3.446(4.355-0.909) = 27568 total NPV is 2568 so pv of cash inflow = 27568 sensitivity will be 27568/2568 which gives us 10.73% , may I ask where am I wrong ?Why, when you are calculating the present value of the annuity, do you write that it is
2-6???If the first receipt is in 1 years time (i.e. at time 1) then the receipts are 1 to 5 (not 2 to 6) !!
oh my bad , i thought first receipt in one year time implied its going to begin after year 1 , anyway thank you
Q, The following are exchange rates for sterling , euro/sterling 1.44 , yen/sterling 232.11 us$/sterling 1.71 how many euros would you get to the us$ the answer is 0.84 , can you please tell me how ?
In future, if you want an answer from me, then please ask in the Ask the Tutor Forum. This forum is for students to help each other.
1 GBP is equal to 1.44 euros. 1 GBP is also equal to $1.71.
So 1.44 euros is equal to $1.71.
So 1 $ is equal to 1.44/1.71 = 0.84 euros.
Have you watched our free lectures on foreign exchange??
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