242 RATEOF RETURNANALYSISbenefits by $8000. The cash flow for the project is
as follows:
Year Cash Flow
o -$15,000
1 +10,000
2 +6,000
3 -8,000
4 +4,000
5 +4,000
6 +4,000
Compute the rate of return for the project.
The followingcash flowhas no positiveinterestrate.
The project, which had a projected life of 5 years,
was terminated early.
Year
o
1
27A-10Cash Flow
-$50
+20
+20
There is, however, a negative interest rate. Compute
its value. (Answer: -13.7%)
For the following cash flow, compute the rate of
return.7A-11Year
o 1 2 3 4 5Cash Flow
-$20
o
-10
+20
-10
+100
Given the following cash flow:
Year Cash Flow
o -$800
1 +500
2 +500
3 -300
4 +400
5 +2757A-12What is the rate of return on the investment?
(Answer:26.55% IRR)7A-13 Consider the following cash flow.
Year
o
1
2Cash Flow
-$100
240
-143If the minimum attractive rate of return is 12%,
should the project be undertaken?7A-14 Refer to the strip-mining project in Example 5-10.
Compute the rate of return for the project.
7A-15 Consider the following cash flow.Year Cash Flow
o -$500
1 800
2 170
3 -550Compute the rate of return on the investment..
7A-16 Determine the rate of return on the investment for
the following cash flow.Year
o
1
2
3Cash Flow
-$100
+360
-428
1687A-17 Compute the rate of return on the investment on the
following cash flow.Year
o 1 2 3 4 5 6Cash Flow
-$1200
+358
+358
+358
+358
+358
-3947A-18 Determine the rate of return on the investment on the
following cash flow.Year
o
1-3
4
5-8Cash Flow
-$3570
+ 1000
-3170
+15007A-19 Bill purchased a vacation lot he saw advertised on
television for an $800 down and monthly payments
of $55. When he visited the lot he had purchased,
he found it was not something he wanted to own.
After 40 months he was finally able to sell the lot.
The new purchaser assumed the balance of the loan
on the lot and paid Bill $2500. What rate of return
did Bill receive on his investment?