In this quiz, \'nominal\' means \'not adjusted for inflation Maintained Assumpti

Question

In this quiz, 'nominal' means 'not adjusted for inflation Maintained Assumptions A1 Nominal' means 'not adjusted for inflation' A2 All values given and asked for are nominal unless otherwise stated. This includes cash flows and rates All values given and asked for are before tax unless otherwise stated. This includes cash flows and rates. Inflation is 2% a year unless otherwise stated. The (before tax, nominal MARR is 10% unless otherwise stated A3 A4 - A5 1. Consider the following investment: Year Cash Flow 200 -200 200 -200 4 6 a. Calculate the approximate ERR for this investment. The approximate ERR is (5 marks) b. Suppose your MARR is 10%, Is this a good investment (yes/no)? (1 mark)

Explanation / Answer

this project gives negative returns only. so it is better to not accept the project irrespective of any calculations.

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