Calculation Of Internal And External Rate Of Return For A Project
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Question
The estimated cash flow of Project XP-05/3 is given below:
|
End of year |
0 |
1 |
2 |
3 |
4 |
|
Cashflow, $ |
-X |
Y |
Y+$400,000 |
Y+$800,000 |
Y+$1.200,000 |
The interest rate is v %.
Determine:
- the present value of the cash flow, if X = $2,000,000, Y = $1,000,000 and v = 8 % monthly compounding
- the equivalent annual value of the cash flow, if X = $2,000,000, Y = $500,000 and v = 12 % yearly compounding
- the value of Y, if the internal rate of return of the cash flow is 10% and X = $3,000,000
- the external rate of return of the cash flow, if X = $2,500,000, Y = $500,000 and the re-investment rate is 10 % yearly compounding
- the internal rate of return of the cash flow, if X = $4,600,000 and Y = $1,000,000
Summary
The question belongs to Finance and it discusses about calculation of present value, annual value, internal and external rate of return for a project.
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