Question

You can calculate the return on equity of any investment that consists of one cash inflow and outflow using the zero coupon bond approach.

O True O False

Answer 1

TRUE

Step-by-step explanation:

The poiunt is, we are going to discount the cash at the end and compare with the cash at the beginning to know if there is a positive present value.

`(C_e)/((1+r)^n) =C_b`

Having the cash values and know the time lapse between them, we solve for how much the actual rate of the investment is. Know that we can determinate if it fullfil our minimum rate of return.