According to Descartes' rule of signs, how many possible i values are there for the cash flows shown?(a) Find the external rate of return using the modified rate of return (MIRR approach), at an investment rate of 14% per year, and a borrowing rate of 10%. (b) Determine the external rate of return

According to Descartes' rule of signs, how many possible i values are there for the cash flows shown?(a) Find the external rate of return using the modified rate of return (MIRR approach), at an investment rate of 14% per year, and a borrowing rate of 10%. (b) Determine the external rate of return

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 13MC: Which of the following discounts future cash flows to their present value at the expected rate of...

See similar textbooks

Related questions

Q: Wells, Inc., has identified an investment project with the following cash flows. Year Cash Flow $…

A: Future Value: To calculate the future value of the current value we have to adjust the current value…

Q: You have a certain investment with the shown cash flow diagram. The investment rate is 15% and the…

A: To Find: Value of X

Q: please solve the question in detail and without using excel sheets or equations rather use…

A: The modified internal rate of return (MIRR) assumes that positive cash flows are reinvested at the…

Q: An investor is faced with the problem of choosing among 2 investment opportunities that have the…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: Yıl Nakit akışı 0 -1000 TL 1 +300 TL 3 +300 TL 4 +300 TL 5 +300 TL

A: Internal Rate of Return is the rate at which NPV of the Investment is zero. It is compared with MARR…

Q: Problem 07.037 - MIRR calculation For the net cash flow series, find the external rate of return…

A: given information the investment rate = 16% borrowing rate = 11%

Q: The equations below show the discounted or present value of cash flows either one year or twenty…

A: Percentage change in the present value of $100 in 1 year when the interest rate changes from 5% to…

Q: Wells Inc., has identified an investment project with the following cash flows. Year…

A: The future value calculation is an important tool of financial management. In future value…

Q: Consider the following cash flow: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8…

A: IRR stands for internal rate of return. When used, it estimates the profitability of potential…

Q: For the nonconventional net cash flow series shown, the external rate of return per year using the…

A: Computation:

Q: Suppose that a geometric gradient begins with $17,000 at the end of 3 years and increases by 12%…

A: Present worth of the cash flows is the present value of the money today as the value of money in the…

Q: The present value of the cash flow stream is $ (Round to the nearest cent.)

A: Present Value: It is the present worth of the future cash flow stream or the future sum of money.…

Q: For the nonconventional net cash flow series shown, the external rate of return per year using the…

A: Modified internal rate of return (MIRR) : help to determine the attractiveness of an investment.…

Q: Suppose you are looking at the following possible cash flows: -Year 1 CF- $100; -Years 2 and 3 CFs…

A: Given Cash flows: Year Cash Flows 1 100 2 200 3 200 4 300 5 300 Discount rate = 8%

Q: Assuming a 1-year, money market account investment at 4.97 percent (APY), a 2.96% inflation rate, a…

A: Answer 1: Information Provided: APY = 4.97% Inflation rate = 2.96% Marginal tax = 28% Balance =…

Q: QUESTION . Al-Salam is expecting the following cash flows starting at the end of the year BD…

A: The future value of the annuity is the future worth of a cash flow series at a certain rate of…

Q: se the given chash flow diagram and genera vo cash follow diagrams where you can use niform gradient…

A: FV is the worth of the amount on the specified date with the specified rate of interest

Q: QUESTION 4 For the nonconventional net cash flow series shown, the external rate of return per year…

A: MIRR is used to calculate the attractiveness of an investment. Modified internal rate of return…

Q: What is the profitability index for an investment with the following cash flows given a 20 percent…

A: The Profitability Index(PI) is one of the capital budgeting techniques that take into consideration…

Q: In the accompanying diagram, what is the value of K on the left-hand cash-flow diagram that is…

A: Interest rate (i) = 10% Let's equate the future values of cashflows at year 7 in both the diagrams…

Q: 30 20

A: Any cash flow can be represented by equivalent uniform series that can be found by present value…

Q: For the nonconventional net cash flow series shown, the ex return per year using the MIRR method,…

A: The MIRR is the modified rate of internal rate which assumes that reinvestment is different from the…

Q: 16. You are considering an investment with the following cash flows: Year Cash Flow 0…

A: Year Cash Flow 0 -$50,000 1 $ 7,000 2 $ 4,000 3 $9,000 4 $61,000

Q: For the nonconventional net cash flow series shown, the external rate of return per year using the…

A: Given, Borrowing rate 8%. Investment rate is 20%.

Q: Calculate the duration for the following cash flows of an investment. Given the market interest…

A: Year Cash flow 0 0 1 140 2 150 3 160 4 170 5 180 6 190 7 200 8 250 Interest…

Q: For the three mutually exclusive alternatives below, use a MARR of 15% per year to select the best…

A: Rate of Return Analysis - It is the percentage of the net gain or loss of an investment for a…

Q: Morrisey Company has two investment opportunities. Both investments cost $6,900 and will provide the…

A: Net present value (NPV): Net present value is defined as the summation of the present value of cash…

Q: An investment has the following cash flow profile. For each value of MARR below, what is the minimum…

A: Investment is attractive only when IRR is equal to or greater than MARR. Hence, we need to find…

Q: For the net cash flow series, find the external rate of return (EROR) using the MIRR method with an…

A: Formula used for calculating EROR using MIRR is:

Q: For the nonconventional net cash flow series shown, the extermal rate of retum per year using the…

A: Excel Spreadsheet:

Q: Determine the internal rate of return (interest rate at which NPW - $O) if the same set of cash…

A: The given problem can be solved with interpolation technique.

Q: For a given cash flow diagram, if the interest rate i-10%, and A=$600, the F value is closest to:…

A: Future value of the annuity "A" of $600 for 5 years and "P" of $4000 at year 0 needs to be…

Q: Assuming a 1-year, money market account investment at 5.38 percent (APY), a 3.1% inflation rate,…

A: Real rate of return is the rate which is actually earned on the investment after adjusting the…

Q: For the nonconventional net cash flow series shown, the extermal rate of retum per year using the…

A: Excel Spreadsheet:

Q: Fox Co. has identified an investment project with the following cash flows. Year 1 Cash Flow $1,330…

A: Present value can be defined as the current value of an amount of money or a series of cash inflows…

Q: given the following stream of cash flows and an interest rate of 8 percent, what is its future…

A: The future value will be calculated after compounding of the present investment in the future. We…

Q: Find the value of the unknown quantity in the cash flow diagram to establish equivalence of cash…

A: A uniform gradient is a cash-flow series which either increases or decreases uniformly. In the cash…

Q: Assuming a 1-year, money market account investment at 2.51 percent (APY), a 1.1% inflation rate, a…

A: After tax rate of return will be calculated to get the exact return a person earn from investment…

Q: Fox Co. has identified an investment project with the following cash flows. Year Cash Flow $ 970 760…

A: Present Value Present value refers to the discounted value of cash flows which is occurring at a…

Q: . What is the present value of the following set of cash flows, discounted at 9.3% per year? Year 1…

A: Note: As per our guidelines, we can only answer one question at once. Since, you haven't…

Q: or the nonconventional net cash flow series shown, the external rate of return per year using the…

A: ERROR is the external rate of return, MIRR is the modified internal rate of return, b is the…

Q: Given the cash flow diagram below, expressed in months, determine: A. The Present value at a nominal…

A: NPV and IRR both are methods of capital budgeting that are used to make decesion of selecting and…

Q: For the nonconventional net cash flow series shown, the external rate of return per year using the…

A: Given: Borrowing rate/finance rate = 8% Investment rate/re-invetsment rate = 20% When the cash flows…

Question

Pls solve ASAP

3. According to Descartes' rule of signs, how many possible i* values are there for the cash flows
shown?(a) Find the external rate of return using the modified rate of return (MIRR approach), at an
investment rate of 14% per vear, and a borrowing rate of 10%. (b) Determine the external rate of return
using the ROIC approach
Year
2
3
4
6
NCF, $-9000 +4100 -2000 -7000 +12,000 +700 +800

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Healthcare Claim Preparation and Transmission

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

The cash flows for two alternatives X and Y are shown in the table displayed here. Year: 0 1 2 3 4 5 Alternative X: -$3,000 900 900 900 900 1,300 Alternative Y: -$5,000 1,400 1,400 1,400 1,400 2,100 Write an equation using appropriate compound-interest factors that could be used to solve for the incremental rate of return (ΔIRR) associated with these two alternatives. Do NOT solve this equation for ΔIRR.
What is the NPV of the following cash flows if the required rate of return is 0.09? Year 0 1 2 3 4 CF -6,816 3,577 3,505 2,732 3,757
16)For the following stream of free cash flows, calculate the internal rate of return. Year 0 1 2 3 4 5 Free Cash Flows -45,452 10,005 14,921 12,537 10,452 21,455 Group of answer choices 14.5% 12.7% 13.9% 11.5%
= 6) Find the internal rates of return on a cash flow with deposit amounts of A = A₁ = 240, B₁ 120, A₂ = 20, B₂ = 290, and withdrawal amounts of Bo at times t = 0, t = 1, t = 2, respectively. = 40, 10,
For the cash flows shown and in preparation for a PW-based rate of return analysis, determine the incremental cash flow between machines B and Afor (a) year 0, (b) year 3, and (c) year 6.
Consider a series of cash flow for a loan financing depicted by a CFD given in Figure Q2(a). With the appropriate interest rates indicated and referring to the Table of Interest. a) Construct the equation and solve the present worth equivalent. b) Construct the equation and solve the series equivalents for the cash flow series. 10%
Determine the ERR (External rate of return) of the cash flows if external rate (e) is given as %12. Cash Flow Year 0 1 2 3 4 5 6 7 Select one: a.0.228861 b.0.204146 c.0.245007 d.0.274516 e.0.181262 f.0.168017 g.0.19667 h.0.264278 -5000 2000 4000 -1500 3000 4000 -6000 9000
What is the yield on the following set of cashflows? Time Cashflow (£) t = 0 t=1 H 400 t=2 t = 3 -100 -120 t = 4 -140 t = 5 -160
Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. For r=0.1, calculate the present value of the two assets. Determine the set of all interest rates {r} such that asset A is more valuable than asset Draw the present value of the assets as a function of the interest rate. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)
Which of the following statements are correct? The internal rate of return (IRR) generated by a positive cash flow stream of n payments. (a)is always smaller or equal than +1 (b)is always given by the solution of a quadratic equation (c)is always bigger or equal than -1 (d)can be 17 for a suitable cashflow (e)can be -2 for a suitable cashflow
For a given cash flow diagram, if the interest rate i=10% , and A=$800, the F value is closest to:
Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)