Cash Flow Intuition
A project has an initial cost of I , has a required return of R , and pays C annually for N years.
a. Find C in terms of I and N such that the project has a payback period just equal to its life.
b. Find C in terms of I, N , and R such that this is a profitable project according to the NPV decision rule. c. Find C in terms of I, N , and R such that the project has a benefit-cost ratio of 2.
Cash Flow Intuition