Question
In: Economics
The IRR is the interest rate that makes the Present Worth "PW" of all the cash...
The IRR is the interest rate that makes the Present Worth "PW" of all the cash flows (inflows and outflows) equal to zero
| True | |
| False |
Solutions
Expert Solution
True
if we talk in simple terms then internal rate of return is the interest rate at which present worth is zero
it the rate of return that company is expecting from any investment
Rahul Sunny answered 2 years agoRelated Solutions
Please Solve it ASAP. "A company's present worth (PW) is given by the following equation: PW...
Please Solve it ASAP.
"A company's present worth (PW) is given by the following
equation: PW = -$180069 + 2.056X(Y-15) + 33180S, where X is the
demand, Y is the unit price, and S is a factor that determines the
salvage value. All three of these are random variables. Use
simulation, like SIPMath, to simulate the present worth of BMC with
100,000 trials. Set X as a normal distribution with mean 2415 and
standard deviation 119. Set Y as a...
"A company's present worth (PW) is given by the following equation: PW = -$180062 + 2.199X(Y-15)...
"A company's present worth (PW) is given by the following
equation: PW = -$180062 + 2.199X(Y-15) + 36560S, where X is the
demand, Y is the unit price, and S is a factor that determines the
salvage value. All three of these are random variables. Use
simulation, like SIPMath, to simulate the present worth of BMC with
100,000 trials.
Set X as a normal distribution with mean 2292 and standard
deviation 114. Set Y as a trianglular distribution with the...
For the below Cash Flow find PW using 10% interest rate. years $ cost 0 4,888...
For the below Cash Flow find PW using 10% interest rate.
years
$ cost
0
4,888
1
-
2
-
3
3,000.00
4
3,100.00
5
3,200.00
6
3,300.00
7
3,400.00
8
3,500.00
Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax...
Perform a present worth (PW)-based evaluation of the two
alternatives below using a spreadsheet. The after-tax minimum
acceptable rate of return (MARR) is 8% per year, Modified
Accelerated Cost Recovery System (MACRS) depreciation applies, and
Te = 40%. The (GI - OE) estimate is made for
the first 3 years; it is zero in year 4 when each asset is
sold.
Alternative
X
Y
First Cost, $
–8,000
–13,000
Salvage Value, Year 4, $
0
2,000
GI-OE, $ per Year...
Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax...
Perform a present worth (PW)-based evaluation of the two
alternatives below using a spreadsheet. The after-tax minimum
acceptable rate of return (MARR) is 8% per year, Modified
Accelerated Cost Recovery System (MACRS) depreciation applies, and
Te = 40%. The (GI - OE) estimate is made for
the first 3 years; it is zero in year 4 when each asset is
sold.
Alternative
X
Y
First Cost, $
–8,000
–13,000
Salvage Value, Year 4, $
0
2,000
GI-OE, $ per Year...
Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax...
Perform a present
worth (PW)-based evaluation of the two alternatives below using a
spreadsheet. The after-tax minimum acceptable rate of return (MARR)
is 8% per year, Modified Accelerated Cost Recovery System (MACRS)
depreciation applies, and Te = 40%. The (GI -
OE) estimate is made for the first 3 years; it is zero in year 4
when each asset is sold.
Alternative
X
Y
First Cost, $
–8,000
–13,000
Salvage Value,
Year 4, $
0
2,000
GI-OE, $ per
Year...
Question 11 pts The interest rate at which the present worth and the equivalent uniform annual...
Question 11 pts
The interest rate at which the present worth and the equivalent
uniform annual worth are equal to 0 is called the internal rate of
return.
True
False
Question 21 pts
To determine the internal rate of return, you can calculate net
present worth at varying interests and select the interest rate
where NPW = 0.
True
False
Question 31 pts
If the internal rate of return of a project is less than your
MARR, then the project...
Calculate and report and valid present worth measures using the listed interest for all the three...
Calculate and report and valid present worth measures using the
listed interest for all the three options given below. What is the
name of the best option economically?
Dakota
Delta
Derby
Interest
8%
8%
8%
Purchase
127,000
79,000
102,000
Annual Revenue
44,800
48,600
94,400
Annual Expenses
44,800
48,600
94,400
Salvage
4,000
2,500
6,500
Life
6
6
6
3. The IRR is the rate which makes the principal at the beginning of the year...
3. The IRR is the rate which makes the principal at the
beginning of the year following the last cash flow is paid out
equal to 0. This is shown in the table below. Use the Goal Seek
function of Excel to find this rate.
A
B
C
D
E
F
G
H
1
IRR?
3.00%
2
LOAN TABLE
3
Year
Cash flow
Year
Principal at beginning of year
Payment at end of year
Interest
Principal
4
0
-800
1...
Which equipment is preferred if the firm’s interest rate is 9%? In PW terms how great is...
Which equipment is preferred if the firm’s interest rate is
9%? In PW terms how great is the difference?
Alternative
Equipment A
Equipment B
First Cost
$55,000
$25,000
Annual O & M
3,900
4,200
Salvage Value
0
5000
Overhaul (Year 6)
10000
Not required
Life, in years.
10
5
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