# Calculation Of Internal And External Rate Of Return For A Project

Question

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

Summary

The question belongs to Finance and it discusses about calculation of present value, annual value, internal and external rate of return for a project.

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