The prevailing interest rate is 5 over the first year and, Ask an Expert

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The prevailing interest rate is 5% over the first year and 10% over the second year.

That is, over 2 years, your interest rate is (1 + 5%) . (1 + 10%) - 1 = 15.5%.

Your project costs $1,000 and will pay $600 in the first year and $500 in the second year. What does the IRR rule recommend? What does the NPV rule recommend?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91990199

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