For the nonconventional net cash flow series shown, the external rate of return per year using the MIRR method, with an investment rate of 20% per year and a borrowing rate of 8% per year, is closest to: (choose one)
(a) 10.8%
(b) 12.0%
(c) 14.8%
(d) 16.7%
 ANSWER.png)
PW0 = -40,000 – 29,000(P/F,8%,2)
= -40,000 – 29,000(0.8573)
= $-64,862
FW4 = 13,000(F/P,20%,3) + 25,000(F/P,20%,1) + 50,000
= 13,000(1.7280) + 25,000(1.2000) + 50,000
= $102,464
-64,862(F/P,i',4) + 102,464 = 0
-64,862(1 + i')4 + 102,464 = 0
i' = (102,464/64,862)1/4 – 1
i' = 0.121 (12.1% per year)
Answer is (b) 12.0%
You might also like to view...
The English system is the most used in heating and air conditioning.
Answer the following statement true (T) or false (F)
Concrete cures to its maximum strength, under normal conditions, in about _____
a. 7 days b. 14 days c. 21 days d. 28 days
What is the common recommended PPE for arc flash?
What will be an ideal response?
If a vibration is felt in the steering wheel above 45 MPH, the problem is usually out-of-balance rear tires
Indicate whether the statement is true or false