Problem:
The cash flow for an engineering project is given below:
|
End of year
|
0
|
1
|
2
|
3
|
4
|
5
|
|
Cash flow, $
|
-x
|
y
|
l-2y
|
1.4y
|
1.6y
|
1.8y
|
Where x = $3,500,000, y = $800,000 and the interest rate is z %.
Determine:
- the equivalent uniform annual value for the cash flow, if z = 8 % annually compounding
- the payback period
- the present value of the cash flow, if z = 8 % per year - quarterly compounding
- the interest rate (the value of z), if the present value of the cash flow is $450,000
- the reinvestment rate, if the external rate of return is 6 %
- the external rate of return, if the re-investment rate is 10 % yearly compounding
- the internal rate of return
Additional Information:
This question generally belongs to the Finance as well as it discusses about computation of annual value, present value of cash flow and internal and external rate of return for a project.