Use the ERR method with ? =%7 per year to solve a unique rate of return for...

Use the ERR method with ? =%7 per year to solve a unique rate of return for the following cash flow diagram.

Year	Cash Flow
0	-200
1	-140
2	+570
3	-830
4	+470
5	+320
6	-120

Expert Solution

ERR method means External rate of return method where discount cash outflows or find the PV of cash outflows at External investment rate or E which is 7% here and at same E= 7% we compound cash inflows or find the future value of cash inflows.

For example at 7% PV of year 1 cash outflow is 10/1.07= 9.3457 and future value of 10 for year 1 is 10*1.07= 10.70.

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jeff jeffy answered 1 year ago

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