Question

Using a MARR of 12%, find the external rate of return (ERR) for the following cash flow. Is this project economically attractive?

Cash Flow($)
Year
0
-25,000
1
20,000
2
-20,000
3
15,000
17,000
4
Expand
Transcribed Image Text

Cash Flow($) Year 0 -25,000 1 20,000 2 -20,000 3 15,000 17,000 4

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Finance

Related Finance Q&A

Find answers to questions asked by students like you.

Q: what is a provable intrinsic value? can you give a example

A: Intrinsic value of a stock is its fundamental value. This is calculated by taking in to consideratio...

Q: Based on current dividend yields and expected capital gains, the expected rates or return on portfol...

A: Capital asset pricing model can be used to study the how systematic risk on a particular asset is li...

Q: I am having some trouble with a similar problem except in this problem you have to determine the dis...

A: The discount rate refers to the interest rate charged on the 200​ day note.

Q: Consider the following income statement for the Heir Jordan Corporation:    HEIR JORDAN CORPOR...

A: Income statement for Year 2, using the percentage of sales approach is prepared as below

Q: Question: Assuming the debt-equity ratio is 0.70, what is the value of the Microsoft? Which factors ...

A: Firm’s value represents the total value including market capitalization, debt (long-term and short-t...

Q: How much money will you have in 2 years if you deposited $5500 into an account 4 years ago earning s...

A: Calculate the future value as follows:

Q: If $800 is invested for one year at 6% compounded quarterly, the amount of  interest earned is -----...

A: Principal, P = $ 800Interest rate is 6% compounded quarterlyHence, r = 6%, m = frequency of compound...

Q: What is the explanation for the mechanics of compounding?

A: Compound interest can be defined as the interest earned on principal amount and on all previous inte...

Q: What mortgage would result in a higher payment? Mortgage A  $985 a month for 30 years or Mortgage B ...

A: Click to see the answer

Q: Gilmore, Inc., had equity of $215,000 at the beginning of the year. At the end of the year, the comp...

A: The maximum growth which a firm can achieve by using internal resources and fund is known as interna...

Q: Determine the periodic deposit. round to the nearest dollor. Rate 5% compounded annually time 18 yea...

A: Calculation of Periodic Deposit: The periodic deposit is $5,331.93.Excel Spreadsheet:

Q: The Price-Earning ratio (P/E) of stock  A, B, C are 5, 3, 7 respectively. Which one you should buy?

A: A Price-earnings ratio is the relationship between firm's stock price and earnings per share. The hi...

Q: If you invest $900 in a bank in which it will earn 8 percent compounded quarterly, how much will it ...

A: PV = $ 900; r = 8% compounded quarterly; m = frequency of compounding = 4 (as there are four quarter...

Q: The calculation of a hurdle rate when looking capital expenditures involves looking at what financia...

A: Generally companies take up new projects only when the project passes the hurdle rate (HR). As the n...

Q: Scenario Probability Stock fund Rate of Return Bond fund Rate of Return Severe recession 0.05 -30 ...

A: Hence the stock fund mean return is 10.35%.The mean return of stock fundt is calculated by multiplyi...

Q: 1. Today, a new release movie ticket costs $8.00. If the average annual inflation rate is 2.5%, who ...

A: Calculation of future value:Answer:Future value of ticket cost is $21.48Definition:Future value is t...

Q: MTH Q1 Question 1. A call butterfly with strikes (K1,K2,K3) is a portfolio consisting of long 1 K1 c...

A: A long butterfly spread with calls is a strategy of three-part call option trading where one call wi...

Q: Which of the following is the best explanation of what the call premium is?   Group of answer choice...

A: Call premium refers to the amount over (above) the par value of a share or bond which is payable to ...

Q: Topic: Payout Policy What are the drawback(s) of distributing dividends instead of retained earnings...

A: The dividend policy is a decision in deciding the exchange between paying dividends and retaining ea...

Q: Paul and Sandy Moede signed an $8000 note at Citizen's Bank. Citizen's charges a 6.50% discount rate...

A: Computation of effective rate of interest:Hence, the effective rate of interest is 6.87%.

Q: New parents wish to save for their newborn's education and wish to have $46,000 at the end of 17 yea...

A: Computation of yearly payment:Hence, the yearly payment is -$1,682.02.

Q: solve the following showing all workings in microsoft word   It is now January 1, 2018 you plan to m...

A: Future value annuity due is a method used to calculate the total amount at the end of a period when ...

Q: Questions are on image

A: (1)Computation of closing stock and cost of goods sold is as follows:Calculation:Therefore, the valu...

Q: The equity versus debt decision relies on a large number of factors such as the existing capital str...

A: As a rule, the superlative capital structure for a business is a capital structure which decreases t...

Q: A family spends $46,000 a year in living expenses.If prices increase 3% a year for the next 3 years ...

A: The value of the asset that is expected to be in future due to specified growth rate is known as fut...

Q: Camber Corporation has to decide if they can finance purchasing 10 new machines for all their manufa...

A: 1.The original cost per machine is $1,730,000 and the overall cost needed to buy 10 machines is as f...

Q: Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financin...

A: Calculation of Monthly Payment:The monthly payment is $710.04.Excel Spreadsheet:

Q: An investor purchased 500 shares of Electric Shaver Corporation stock at a price of $22.50 per share...

A: Calculate the total percentage return as follows:

Q: How much money should be invested in an account that earns 9% interest, compounded monthly, in order...

A: Computation of the money that has to be invested:Hence, the money that has to be invested is $8,303....

Q: What's the present value, when interest rates are 8.0 percent, of a $160 payment made every year for...

A: The present value is the today’s value related to the future money at a given rate of return. It is ...

Q: You are a management trainee in one of the Manufacturing companies based in Johor, Malaysia. The com...

A: The firm’s value depends on the discount rate and future cash flows. Weighted average cost of capita...

Q: Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financin...

A: Computation of total interest:Hence, the total interest that is paid so far is $1,980.06.

Q: How much will I need to deposit into an account to have $6,500,000 in 10 years earning 5 % compounde...

A: The principal amount (initial amount of deposit) is computed using the given formula:

Q: A corporate coupon bond of 7.0 percent is callable in five years for a call premium of one year of c...

A: A callable bond is one which can be redeemed before the maturity at a call price which is above the ...

Q: You have a loan outstanding. It requires making five annual payments of $7,000 each of the end of th...

A: In order to remain indifferent between the two options,One large payment at the end of the loan’s te...

Q: Four years ago, Bling Diamond, Inc., paid a dividend of $2.15 per share. The firm paid a dividend of...

A: Calculation of Cash Dividend:The cash dividend is $3.47.Excel Spreadsheet:

Q: Standsard revenue bonds are: A.  Backed by the full taxing authority of the municipality. B. Collate...

A: The correct answer is option (b).The revenue bond is defined as a use of proceed revenue bond which ...

Q: Camber Corporation has to decide if they can finance purchasing 10 new machines for all their manufa...

A: a)Calculation of annual payments:Answer:The annual payment is $3,417,453.45.The actual cost of each ...

Q: Need help with NPV and IRR

A: Reinvestment Rate = 3% or 0.03Cash Flow = Old Cash Flow × (1 + Reinvestment Rate) Calculation of NPV...

Q: Ultra Petroleum (UPL) has earnings per share of $1.67 and a P/E ratio of 33.16.   What’s the stock p...

A: P/E or price earnings multiple is one of the valuation techniques used. It is the price per share of...

Q: Ewald Company’s current stock price is $36, and its last dividend was $2.40. In view of Ewald’s stro...

A: Calculate the growth rate as follows:

Q: Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financin...

A: Calculation of Interest Paid over the New Loan:The interest paid over the new loan is $137,184.85.Ex...

Q: 13. Company RTZ has a unique dividend policy. The company anticipates paying a dividend of $8 one ye...

A: Non-constant dividend growth model assumes that for first few years dividends are paid at a non-cons...

Q: Executives at Microsoft are interested to get into the drone delivery business. Since it would take ...

A: Option 1: The present value is $40 million.

Q: A firm is expected to pay a dividend of $3.35 next year and $3.65 the following year. Financial anal...

A: The current value of the stock can be calculated with the help of discounted value of all future cas...

Q: You choose to invest $2,985 income tax refund check (rather than spend it) in an account earning 5% ...

A: Formula:

Q: Year Project A Project B 0     –$ 51,000     –$ 66,000   1     31,000     30,000    2     26,0...

A: NPV refers to the net present value of a project or investment. The formula used to determine NPV of...

Q: Anthony and Susan are married filing jointly. Their combined income is currently $98,000. Both have ...

A: Increment of 8,500 will push the taxable income to the level of = Old income + increment = 98,000 + ...

Q: Question 3. Assume the continuously compounded interest rate has constant value 15%. The table below...

A: Given,Continuously Compounded Interest Rate = 15% Calculation of Future Price (Φ(t,T)), Mark-to-Mark...

Q: negative net exposure C. a fully balanced position. D. zero net exposure. 12. The levels of foreign ...

A: The levels of foreign currency assets and liabilities at banks hove increased in recent years, and t...