Problem:
The estimated cash flow of Project XP-05/3 is given below:
|
End of year
|
0
|
1
|
2
|
3
|
4
|
|
Cashflow, $
|
-X
|
Y
|
Y+$400,000
|
Y+$800,000
|
Y+$1.200,000
|
The interest rate is v %.
Determine:
- the present value of the cash flow, if X = $2,000,000, Y = $1,000,000 and v = 8 % monthly compounding
- the equivalent annual value of the cash flow, if X = $2,000,000, Y = $500,000 and v = 12 % yearly compounding
- the value of Y, if the internal rate of return of the cash flow is 10% and X = $3,000,000
- the external rate of return of the cash flow, if X = $2,500,000, Y = $500,000 and the re-investment rate is 10 % yearly compounding
- the internal rate of return of the cash flow, if X = $4,600,000 and Y = $1,000,000
Additional Information:
This question is basically belongs to the Finance as well as it explains about computation of present value, annual value, internal and external rate of return for a project.