a)Calculate the internal rate of retum (IRR) of the following cash flow. Determine if this is agood investment for a MARR of 3% per year.b)Calculatethe extemalrate of return (ERR) of the following cash flow by assuming a MARRof 3% per year. Determine if this is a good investment.Cash Flow, $-100,000-10,000-1,00013,00013,00013,000Cash Flow, $|16,000|16,00016,00016,00016,00016,000Year6Year123451011

IRR is rate that makes present value(PV) of inflows and outflows of proposal equal whereas ERR is…

a)Calculate the intemal rate of retum (IRR) of the following cash flow. Determine if this is a good investment for a MARR of 3% per year. b)Calculatethe extemalrate of retum (ERR) of the following cash flow by assuming a MARR of 3% per year. Determine if this is a good investment. Cash Flow, $ |-100,000 -10,000 -1,000 13,000 13,000 13,000 Cash Flow, $ 16,000 16,000 16,000 16,000 16,000 |16,000 Year Year 6 1 2 3 4 5 10 11

a)Calculate the intemal rate of retum (IRR) of the following cash flow. Determine if this is a good investment for a MARR of 3% per year. b)Calculatethe extemalrate of retum (ERR) of the following cash flow by assuming a MARR of 3% per year. Determine if this is a good investment. Cash Flow, $ |-100,000 -10,000 -1,000 13,000 13,000 13,000 Cash Flow, $ 16,000 16,000 16,000 16,000 16,000 |16,000 Year Year 6 1 2 3 4 5 10 11

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 4CMA

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