You invest $100,000 today. The year-end cash flows from the investment are as follows: year 1 = $25,000; year 2 = $48,000; year 3 = $75,000; and year 4 = negative $32,431. Determine the annual ROI on this investment. Is there anything unusual about this investment? You may find the following form helpful:
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Cash Flow at End of Year |
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|
Year |
Investment Balance at Start of Year |
Total Amount |
Earnings at ?% |
Capital Recovery |
Investment Balance at End of Year |
|
1 |
$100,000.00 |
$25,000 |
|
|
|
|
2 |
|
$48,000 |
|
|
|
|
3 |
|
$75,000 |
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|
|
|
4 |
|
($32,431) |
|
|
$0 |