Question 1
Saint Mary's is offered a contract, which requires an immediate investment of $25 million. The estimated returns are $5 million per year for 20 years. Compute the rate of return.Question 2
Korea Nuclear tritium removal facility (TRF) project requires an immediate investment of $33 million with a residual value of $7 million at the end of the project. It is expected to yield a net return of $1 million in Year 1 from the sale of immobilized tritium to ITER, $5 million dollars in Year 2, $8 million per year for the following six years, and $7 million per year for the remaining four years. Find the rate of return using Excel's IRR function.Answer 1
19.42%Answer 2
| Initial Cash Flow (in $million) | Net Cash Flow (in $million) |
| | -$33 |
| New Cash Flow Period 1 | $1 |
| New Cash Flow Period 2 | $5 |
| New Cash Flow Period 3 | $8 |
| New Cash Flow Period 4 | $8 |
| New Cash Flow Period 5 | $8 |
| New Cash Flow Period 6 | $8 |
| New Cash Flow Period 7 | $8 |
| New Cash Flow Period 8 | $8 |
| New Cash Flow Period 9 | $7 |
| New Cash Flow Period 10 | $7 |
| New Cash Flow Period 11 | $7 |
| New Cash Flow Period 12 | $14 |
| Internal Rate of Return | 16.38% |