Answer to Question #117428 in Economics of Enterprise for HASAN

Question

5. A bond pays $10 000 per year for the next 10 years. The bond costs $90 000 now. Inflation is expected to be 5 percent over the next 10 years.

Q5 ANSWER:

a) What is the current dollar internal rate of return? (5 points)
PW = …………… + ……………(………………….)
Interest rate PW





b) What is the real internal rate of return? (5 points)
The real internal rate of return:………..………………………= ………………

Answer 1

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