Which of the following equations can be used to find the internal rate of return

Question

Which of the following equations can be used to find the internal rate of return (i) for a project that has the following cash flow? -4000 + 150(P/G, i%, 4) + 850(P/A, i%, 4) + 400(P/A, i%, 4)(P/F, i%, 4} = 0 -4000 + 400(P/A, i%, 8) + 600(P/A, i%, 5) - 150(P/G, i%, 4) = 0 -4000 + 1000(P/A, i%, 8) - 150(P/G, i%, 8) + 150(P/G, i%, 4)(P/F, i%, 4) = 0 None of the above Three estimates have been developed for a project with a 10-year life. Use an interest rate of 12% to determine the project's expected present worth. The value is closest to which of the following? $17.274 $20.350 $23,872 $27,844

Explanation / Answer

1.2 Answer is d) None of the above.

Explanation :- At IRR NPV is Zero.

So NPV = Present value of cash inflow - Present value of cash outflow

corrrect fomulla is as follows.

0 =$1000/(1+R)+$850/(1+R)^2+$700/(1+R)^3+$550/(1+R)^4+$400/(1+R)^5+$400/(1+R)^6+$400/(1+R)^7+$400/(1+R)^8 -$4000

1.3

Projects Expected Present Worth is closest to (d) $27,844

$ S-1 S-2 S-3 Total Annual Benefit              8,000              7,500              6,000 PVIFA           5.6502           5.6502           5.6502 present Value (A)           45,202           42,377           33,901 ADD Salvage Value              4,500              3,500                     -   PVIFA           0.3220           0.3220           0.3220 present Value (B)              1,449              1,127                     -   Total present value (A+B)           46,650           43,503           33,901 Initia cost         (10,000)         (15,000)         (17,500) NPV           36,650           28,503           16,401          81,555

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.