You buy a rental property for $180,000. Assuming that you could sell the property for $250,000 at the end of 6 years, what is yo
ur return based on the following cash flows? Year 0 (now) = – 180,000 End of Year 1 = + 24,000 End of Year 2 = + 24,000 End of Year 3 = – 3,000 and +12,000 End of Year 4 = + 18,000 End of Year 5 = + 30,000 End of Year 6 = + 32,000
1 answer:
Answer:
15.542%
Step-by-step explanation:
For uneven cash flows such as those in this problem, there is no formula for "internal rate of return" (IRR). It must be computed graphically or iteratively. Spreadsheets and financial calculators are equipped to do this calculation. Attached is the result of the calculation done by a graphing calculator.
The sum of "present value" of each of the cash flows is zero when the discount rate is the IRR.
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Answer:
Step-by-step explanation:
In this problem we have the equation of the following quadratic equation and we want to solve it using the method of square completion:
The steps are shown below:
For any equation of the form:
1. If the coefficient a is different from 1, then take a as a common factor.
In this case . Then:
2. Take the coefficient b that accompanies the variable x. In this case the coefficient is 4. Then, divide by 2 and the result squared it.
We have:
3. Add the term obtained in the previous step on both sides of equality, remember to multiply by the common factor :
4. Factor the resulting expression, and you will get:
Now solve the equation:
Note that the term is always
therefore it can not be equal to -28.
The equation has no solution in real numbers.
In the same way we can find the complex roots:
