IRR : What initial cost of machine D will make the IRR for the two machines equal?

IRR

1. What is the IRR for a machine with the following details?

APR (Nom / y) 9% p y c d
Initial cost ($475,000)
Salvage value 20% of purchase value
First year cost ($106,000)
Inflation (all costs) 6.50% p y
First year revenue $195,000
Increase in revenue 11% p y
Life of machine 5 years
Life of project 20 years
Group of answer choices

7.00%

13.26%

18.45%

22.96%

2. What initial cost of machine D will make the IRR for the two machines equal?

Cost of Machine C ($625,000) Cost of Machine D ($900,000)
Salvage value 17% of purchase value Salvage value 19% of purchase value
First year cost ($85,000) First year cost ($102,000)
Inflation (all costs) 3.00% p y Inflation (all costs) 3.50% p y
First year revenue $190,000 First year revenue $215,000
Increase in revenue 4% p y Increase in revenue 6% p y
Life of machine 5 years Life of machine 5 years
Life of project 20 years Life of project 20 years
Group of answer choices

  • $479,095
  • $770,040
  • $730,419
  • $1,961,354

3.Which graph shows the net present worth of Project X at various rates of interest from 0% to 50%? The file with the graphs is attached here:Quiz 5-9.pptx

Years Project X
0 ($770,040)
1 ($347,490)
2 $143,612
3 $143,612
4 $143,612
5 $143,612
6 $168,239
7 $168,239
8 $365,479
9 $218,287
10 $229,202
Group of answer choices

  1. Graph 1
  2. Graph 2
  3. Graph 3
  4. Graph 4

4. For what finance rate, will the two projects have the same MIRR?

Finance rate 5.00% Years Project E Project F
Reinvest rate 8.0% 0 ($575,000) ($1,345,000)
1 $155,000 $173,000
2 $155,000 $173,000
3 $155,000 $173,000
4 $155,000 $173,000
5 ($575,000) $173,000
6 $172,000 $173,000
7 $172,000 $173,000
8 $172,000 $173,000
9 $172,000 $173,000
10 $172,000 $173,000
Group of answer choices

1.73%

1.28%

0.43%

0.24%