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Date Posted: 06:47:27 05/03/02 Fri
Author: Dr. D.
Subject: Re: Summer 99, #25 (Cash Flow = NI + Depreciation
In reply to: Jimi Crozier 's message, "Summer 99, #25" on 19:59:32 05/02/02 Thu

>On Practice final (Summer 99), # 25 says that $300,000
>a year for ten years gives you an 11.3% IRR on
>$4,000,000 today; now maybe I'm dumb, but that doesn't
>make too much sense to me. PLEASE HELP!!!!!
Remember -
Operating Cash flow = Net income + Depreciation,
so cash flows are:

Year 0 : -4,120,000
Years 1-9: 300,000+ 400,000=700,000
Year 10: 700,000 (see above) + 120,000 = 820,000

Hope that helps

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