Homework Clinic
Mathematics Clinic => Grade 11 and 12 Mathematics => Topic started by: jhjkgdfhk on Jun 7, 2019
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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).
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Answer 1
CF0 = 150 000 ±
Compute IRR = 17.261192 = 17.3%
Answer 2
CF0 = 420 000 ±
Compute IRR = 13.596638% = 13.6%
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TY
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