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.

Coming to the above question

jeff jeffy answered 2 years ago

Use the ERR method with ? =%10 per year to solve a unique rate of return for...

Use the ERR method with ? =%10 per year to solve a unique rate of return for the following cash flow diagram. Year Cash Flow 0 -200 1 -100 2 +550 3 -820 4 +430 5 +340 6 -160

Only IRR (internal rate of return) and ERR explanation is required with examples. Thanks

A. What is the ERR for this project? Assume that MARR = 15% per year. Is...

A. What is the ERR for this project? Assume that MARR = 15% per year. Is this project considered to be profitable? Investment cost $15,000 Expected life 7 years Market (salvage) –$1,500a Annual receipts $8,750 Annual expenses $3,550 a A negative market value means that there is a net cost to dispose of an asset. B. What is the discounted payback period?

What are the principal objections to the use of the average rate of return method in...

What are the principal objections to the use of the average rate of return method in evaluating capital investment proposals? Discuss the principal limitations of the cash payback method for evaluating capital investment proposals. Why would the average rate of return differ from the internal rate of return on the same project? ***Satisfactory posts are 15 points***

Use Goal Seek in Excel, to solve for the yield to maturity (market rate of return)...

Use Goal Seek in Excel, to solve for the yield to maturity (market rate of return) on a corporate bond with a coupon rate of 4% per year, a maturity of 20 years, and a market value (price) of $1,210. Assume semi-annual coupon payments and a maturity payment of $1,000 per bond.

Calculator Internal Rate of Return Method The internal rate of return method is used by King...

Calculator Internal Rate of Return Method The internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves an investment of $73,600 and annual net cash flows of $10,000 for each of the 10 years of its useful life. Present Value of an Annuity of $1 at Compound InterestYear6%10%12%15%20%10.9430.9090.8930.8700.83321.8331.7361.6901.6261.52832.6732.4872.4022.2832.10643.4653.1703.0372.8552.58954.2123.7913.6053.3522.99164.9174.3554.1113.7843.32675.5824.8684.5644.1603.60586.2105.3354.9684.4873.83796.8025.7595.3284.7724.031107.3606.1455.6505.0194.192 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return....

Internal Rate of Return Method The internal rate of return method is used by Testerman Construction...

Internal Rate of Return Method The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $75,285 and annual net cash flows of $15,000 for each of the 10 years of its useful life. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106...

4) The firms use both Net PV method and IRR (Internal Rate of Return) Method to...

4) The firms use both Net PV method and IRR (Internal Rate of Return) Method to evalauate investments. The IRR method, however, have some problems. The three problems cited regarding IRR are a) Re-investment assumption b) Multiple Root Problem c) Unconventional Cash Flow Problem. What are these problems? Explain these problems clearly by giving examples if necessary .

Perpetual preferred stock has: Par value- $50/share dividend rate- 7%/year investors require- 9.5% per year return...

Perpetual preferred stock has: Par value- $50/share dividend rate- 7%/year investors require- 9.5% per year return to hold pref. stock. what is its value per share?

Use a risk-free rate of 3% and a market return of 7%. If your $500,000 portfolio...

Use a risk-free rate of 3% and a market return of 7%. If your $500,000 portfolio has a beta of 1.1, should you add $50,000 of a stock with a beta of 1.8 and an expected return of 11.0%? . Depends on the market conditions B. Yes C. No D. Not enough information to answer

Question