Problem 12-13 Economic Income Consider the following project: Period Net cash flow 0 -105 1 0 2 3 79.55 82.28 The internal rate of return is 19%. The NPV, assuming a 19% opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Period 1 2 3 Change in value (economic depreciation) Expected economic income
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The problem states that the net cash flow for the project is -105. This means that the project is expected to generate a negative cash flow of 105 units. Show more…
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