Answer:
a) The IRR is 10%
b) The FW if MARR = 12% is -$27070.25.
c) The ERR when externeal reinvestment rate per period is 12%. is 10.74%.
Explanation:
a)
PW(i%) = -23000 - 1200(P/A, i%, 4) - 8000(P/F, i%, 4) + 5500(P/A, i%, 11)(P/F, i%, 4) + 33000(P/F, i%, 15)
= 0
Solve for i%
IRR = 10%
Therefore, The IRR is 10%
b)
FW (12%) = -23000(F/P, 12%, 15) - 1200(F/A, 12%, 4)(F/P, 12%, 11) - 8000 (F/P, 12%, 11) + 5500(F/A, 12%, 11) + 33000
= -23000(5.4736) - 1200(4.7793)(3.4785) - 8000(3.4785) + 5500(20.6546) + 33000
= -27070.25
Therefore, The FW if MARR = 12% is -$27070.25.
c)
[23000 + 1200(P/A, 12%, 4) + 8800(P/F, 12%, 4)](F/P, i%, 15) = 5500 (F/A, 12%, 11) + 33000
[23000 + 1200(3.0373) + 8000(.6355)](F/P, i%, 15) = 5500(20.6546) + 3300
31725.76 (1 + i)^15 = 146600.3
ERR = 10.74%
Therefore, The ERR when externeal reinvestment rate per period is 12%. is 10.74%.
