Answer:
IRR= 14,96%
The firm should not accept the project, due o the fact that the internal rate of return is lower than the required return. (14,96%<16%)
Explanation:
The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments. The internal rate of return (IRR) rule is a guideline for evaluating whether to proceed with a project or investment. The IRR rule states that if the internal rate of return on a project or investment is greater than the minimum required rate of return, then the project or investment should be pursued. If it is lower than the cost of capital or required rate o return, the best course of action is to reject the project.
$0 = (initial investment x -1) + CF1 / (1 + IRR) ^ 1 + CF2 / (1 + IRR) ^ 2 + ... + CFX / (1 + IRR) ^ X
Initial Invesment= Total initial investment costs year x-1
CFx= Cash Flow during period X
IRR= Internal rate of return
Because of the nature of the formula, however, IRR cannot be calculated analytically and must instead be calculated either through trial-and-error or using software programmed to calculate IRR.
<u>In this case:</u>
IRR= -27200+ 11200/(1+IRR)^1 + 14200/(1+IRR)^2 + 10200/(1+IRR)^3
IRR= 14,96%
The firm should not accept the project, due o the fact that the internal rate of return is lower than the required return. (14,96%<16%)
Answer:
11.33%
Explanation:
The dividend valuation model will be used here to calculate the cost of equity raised which can be calculated using the following formula:
r = D1 / (Po - F) + g
Here D1, Po, F and g are given in the question so by putting the values in the equation, we have
r = $1.75 / ($42.5 - 5% of Po) + 7%
r = 11.33%
Answer:
<h2>r= 6.054% per year</h2>
Explanation:
given that
principal P= $10,000
final amount A= $18,000
time t= 10 years
To find the annual rate we will use the formula below and solve for r
![r = [(\frac{A}{P} )^\frac{1}{t} - 1]](https://tex.z-dn.net/?f=r%20%3D%20%5B%28%5Cfrac%7BA%7D%7BP%7D%20%29%5E%5Cfrac%7B1%7D%7Bt%7D%20%20-%201%5D)
Substituting our data into the expression and solving for r we have
![r = [(\frac{18000}{10000} )^\frac{1}{10} - 1]\\\\r = [(1.8 )^\frac{1}{10} - 1]\\\\r = [(1.8 )^0^.^1 - 1]\\\\r = [(1.8 )^0^.^1 - 1]\\r={1.06054-1}\\\\r= 0.06054](https://tex.z-dn.net/?f=r%20%3D%20%5B%28%5Cfrac%7B18000%7D%7B10000%7D%20%29%5E%5Cfrac%7B1%7D%7B10%7D%20%20-%201%5D%5C%5C%5C%5Cr%20%3D%20%5B%281.8%20%29%5E%5Cfrac%7B1%7D%7B10%7D%20%20-%201%5D%5C%5C%5C%5Cr%20%3D%20%5B%281.8%20%29%5E0%5E.%5E1%20%20-%201%5D%5C%5C%5C%5Cr%20%3D%20%5B%281.8%20%29%5E0%5E.%5E1%20%20-%201%5D%5C%5Cr%3D%7B1.06054-1%7D%5C%5C%5C%5Cr%3D%200.06054)
Calculate rate of interest in percent
r = 0.06054* 100
r= 6.054% per year
The truth is that no business is the same and many
micro-businesses can get started for as little as $3,000 or less. These
businesses are often home-based sole proprietorships with low upfront
investments.
<span>Answer: Matched pairs design
Explanation: Matched pairs design is a special case of a randomized block design. It can be used when the experiment has only two treatment conditions; and subjects can be grouped into pairs, based on some blocking variable. Then, within each pair, subjects are randomly assigned to different treatments.</span>
