The Martian Corporation, a space vehicle development company, is starting a new division that will develop the next generation launch missile engine configuration. Use a hand application of the MIRR method to determine the EROR for the estimated net cash flows (in $1000 units) of $?50,000 in year 0, $+15,000 in years 1 through 6, and $?8000 in year 7. Assume a borrowing rate of 12% and an investment rate of 25% per year. Also, write the MIRR function to obtain i?.
What will be an ideal response?
PW0 = -50,000 – 8000(P/F,12%,7)
= -50,000 – 8000(0.4523)
= $-53,618
FW7 = 15,000(F/A,25%,6)(F/P,25%,1)
= 15,000(11.2588)(1.2500)
= $211,103
Find EROR i? at which PW0 is equivalent to FW7
-53,618(F/P,i?,7) = 211,103
i’ = (211,103/53,618)1/7 – 1
= (3.93717)1/7 - 1
= 0.216 (21.6%)
Function: = MIRR(B1:B8,12%,25%) displays 21.6% with B1:B8 containing NCF
You might also like to view...
The ____ break line is a ruled, light line with freehand zigzags.
A. short B. long C. cutting D. phantom
A spring checkup costs $50.00 for the service call, and 3 hours at $37.00 per hour. A 6% sales tax brings the total bill to: ?
A. ?$89.22 B. ?$92.22 C. ?$167.66 D. ?$170.66
If one resistance in a four branch series circuit has a lower value then the others this branch will:
a. need more voltage to energize it b. have more current flowing through it than the others c. have less current flowing through it than the others d. consume less power than the others
A contractor purchases a truck for $16,800 and is allowed $2,000 for trading in an old truck. A cash deposit of $200 is made. How much interest is paid for one year at a rate of 12% per annum?
Fill in the blank(s) with the appropriate word(s).