Answered: For the cash flow shown below. Find the…

For the cash flow shown below. Find the external rate of return (EROR) using rate of return approach (MIRR), an investment rate of 15% per year, and a bor 8% per year. Year 1 2. 3 4

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

For the cash flow shown below. Find the external rate of return (EROR) using the modified
rate of return approach (MIRR), an investment rate of 15% per year, and a borrowing rate of
8% per year.
Year
3
4
NCF,$
-9000
+4100
-2000
-7000
+12000
+700
+800
Select one:
O a. 7.9%
Ob.9.9%
O c. 5.9%
O d. 11.9%

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