You invest $100,000 today. The year-end cash flows from the investment are as follows: year 1 = $0; year 2 = $0; year 3 = $0; and year 4 = $90,368.79. Determine the annual ROI for this investment. Does this answer make sense? You may find the following form helpful:
|
Cash Flow at End of Year |
|||||
|
Year |
Investment Balance at Start of Year |
Total Amount |
Earnings at ?% |
Capital Recovery |
Investment Balance at End of Year |
|
1 |
$100,000 |
$0 |
|
|
|
|
2 |
|
$0 |
|
|
|
|
3 |
|
$0 |
|
|
|
|
4 |
|
$90,369 |
|
|
$0 |