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
- Graph 1
- Graph 2
- Graph 3
- 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%