As a matter of fact, if you put those in, you don’t have to do this again because those cash flows are already entered in there. Initial outlay 175 and positive cash flows after that 25, 175, and 50.Īs far as entering those, this is exactly the same as what I showed you before. Positive Net Present Value when we use 10%. Our internal rate of return should be higher than that 10% because we had a So clearly, in order to get to a zero Net Present Value, we’re going to have to increase that. We had a positive Net Present Value at a discount rate of 10%. So, clearing this off, we’ll see we’ve got four to enter, so let’s go through that entering procedure. And this wouldĪctually be cash flow 3 because that’s the third different cash flow out here beyond CF0, our -175. And then we’d say the frequency of cash flow 2 is 2 because there’s 2 of these $100 payments in a row. So this would be cash flow 1, and this would be cash flow 2. Say that this cash flow was $100 instead of $75. So here, we’re going to have to enter in 1, 2, 3, and 4 because they’re all different. Now, one thing about entering these cash flow keys is we’re going to tell it how many of these in a row there are. So we need to enter these expected cash flows. There we had a payment, but it had to be the same payment every period. We talked about using the time value of money keys.
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