The initial cost of investment is Rs.7000 and the discount rate is 10% annually. Find out the NPVwith the help of certainty-equivalent method 4 years cash inflows and certainty coefficient aregiven which shows the probability of occurrence of cash flows.YearCash inflows Certainty Coefficient15,1000.724,2000.62,8000.343,6000.2

Cost of investment = Rs. 7000 Discount rate = 10%

Answered: The initial cost of investment is…

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

Section: Chapter Questions

Problem 1PS

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