For the cash flows shown, determine:
(a) the number of possible i* values
(b) the i* value displayed by the IRR function
(c) the external rate of return using the MIRR method if ii = 18% per year and ib = 10% per year.
First find net cash flow (NCF)
 ANSWER.png)
(a) Rule of signs test: up to 3 values
Cumulative CF sign test: 3 changes; no unique, positive i*
(b) Function: = IRR(B1:B5) displays i* = 39.9%
(c) PW0 = -6000 - 5000(P/F,10%,1) - 2000(P/F,10%,3)
= -6000 - 5000(0.9091) - 2000(0.7513)
= $-12,048
FW4 = 12,000(F/P,18%,2) + 16,000
= 12,000(1.3924) + 16,000
= $32,709
-12,048(F/P,i',4) + 32,709 = 0
-12,048(1 + i')4 + 32,709 = 0
i' = (32,709/12,048)^1/4 – 1
= 0.284 (28.4%)
You might also like to view...
Which of the listed components helps a crane to self-assemble the lattice-boom base?
a. Boom stops b. Main chords c. Spreaders d. Boom mast
A bolt becomes fatigued from working back and forth when it is too loose. The problem is MOST-Likely to occur when the assembly is not properly:
A. torqued. B. crossed threaded. C. drilled. D. annealed.
Rectangular coordinate dimensioning is only used on rectangular parts.
Answer the following statement true (T) or false (F)
Which of the following insects do not belong to the class Insecta?
A. Flies and lice B. Fleas and wasps C. Bees, hornets, and ants D. All of the above E. None of the above