Answer to Question #268368 in Microeconomics for Ray

Question

Project A has a net present value of zero when the discounting factor of 20% is used. How much returns is the project earning?

Answer 1

$NPV=0.$

Discounting factor=20%

Return $=NPV\times(1+i)^t$

$=0\times(1-0.2)^1$

$=0$