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Mathematics Clinic => Grade 11 and 12 Mathematics => Topic started by: jhjkgdfhk on Jun 7, 2019

Title: The Radium Hot Springs plans to install a swimming pool. Construction of the lift is estimated to ...
Post by: jhjkgdfhk on Jun 7, 2019

Question 1

A project requiring an immediate investment of $150 000 and a further outlay of $60 000 after four years has a residual value of $50 000 after nine years. The project yields a negative net return of $10 000 in Year 1, a zero net return in Year 2, $60 000 per year for the following four years, and $70 000 per year for the last three years. Find the rate of return (correct to the nearest tenth of a percent).

Question 2

The Radium Hot Springs plans to install a swimming pool. Construction of the lift is estimated to require an immediate outlay of $420 000. The life of the pool is estimated to be 20 years with a salvage value of $20 000. Cost of preparing the area is expected to be $30 000 for each of the first 2 years of operation. Net cash inflows from the pool are expected to be $49 000 for each of the first five years and $90 000 for each of the following 15 years. Find the rate of return (correct to the nearest tenth of a percent).
Title: The Radium Hot Springs plans to install a swimming pool. Construction of the lift is estimated to ...
Post by: epscape on Jun 7, 2019

Answer 1

CF0 = 150 000 ±
C01 = 10 000 ±F01 = 1
C02 = 0F02 = 1
C03 = 60 000F03 = 1
C04 = 0F04 = 1
C05 = 60 000F05 = 2
C06 = 70 000F06 = 2
C07 = 120 000F07 = 1
Compute IRR = 17.261192 = 17.3%

Answer 2

CF0 = 420 000 ±
C01 = 19 000F01 = 2
C02 = 49 000F02 = 3
C03 = 90 000F03 = 14
C04 = 110 000F04 = 1
Compute IRR = 13.596638% = 13.6%
Title: The Radium Hot Springs plans to install a swimming pool. Construction of the lift is estimated to ...
Post by: jhjkgdfhk on Jun 7, 2019
TY
Title: The Radium Hot Springs plans to install a swimming pool. Construction of the lift is estimated to ...
Post by: epscape on Jun 7, 2019
You're welcome