Question(1) (A)For the Following cash flow is there only one positive
IRR? Prove your answer.
Annual cash flow for corresponding Interest period (j) 0-0, 10, 11-19
is $4,000, $-71,000, $4,000 respectively.
(B) Is this a mixed investment? If so why?
(c)If an external rate is required to calculate the IRR, use 6% per year
Question(2)Calculate the effective annual interest rates that
correspond to 10% compounded daily and 11% compounded biweekly (every
two weeks).
Answer should be self explanatory and Excel worksheet must be used/attached. |
Clarification of Question by
deoghar-ga
on
23 Apr 2005 13:10 PDT
I need answer by April 24, midnight
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Request for Question Clarification by
omnivorous-ga
on
23 Apr 2005 13:21 PDT
Deoghar --
There are 2 things that need be clarified here.
1. My guess is that you intended the discrete cash flows to be for
the following periods:
0-9, 10, 11-19
2. The 10% is an annual interest rate -- but compounded daily? The
same for the 11% rate (compounded 26 times per year)?
Best regards,
Omnivorous-GA
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Clarification of Question by
deoghar-ga
on
23 Apr 2005 13:50 PDT
you are right for the second question clarification. Interest rate is
annual but compounded daily and biweekly.
For the First question, I guess you are right that Interest period be
(0-9) not (0-0). But The question I got has printed (0-0). It might be
misprinting. If you can give me alternate answer for both, I will
appreciate. Thanks
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Request for Question Clarification by
omnivorous-ga
on
23 Apr 2005 14:06 PDT
Deoghar --
It really doesn't make sense as 0-0 because you have no cash flows for
1-9. While I realize that it's economically possible to have no cash
flows, it's not possible for this question to have a POSITIVE IRR if
0-9 aren't positive.
Best regards,
Omnivorous-GA
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Clarification of Question by
deoghar-ga
on
23 Apr 2005 14:50 PDT
Please Answer by taking interest period as (0-0).
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Clarification of Question by
deoghar-ga
on
24 Apr 2005 12:34 PDT
I onlu need answer for Question #1. I have already done Question #2.
Also for First Question, First Interest Period is (0-9)
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