We have learned that the interest rate at which benefits are equated with costs in a...
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We have learned that the interest rate at which benefits are equated with costs in a net cash flow series is called the rate of return, and at this rate, the net present value of the cash flow is equal to zero PW(i %)=0. For the subsequent cash flow series, calculate the rate of return. End of year Cash flow value ($k) 0 - 80 1 2 3 4 5 6 7 20 30 40 50 60 70 80 You need to stick to the following instructions: 1) You need to determine the rate of return using the present worth analysis. 2) The above cash flow diagram has a common series, it is expected to use its factor instead of handling each transaction individually where it takes long time. 3) Numbers are in $k meaning they are in thousands. 4) Use iterations method and a linear interpolation to appropriately approximate the solution. Hint (First and final guess should be between 40% and 50%. 5) The most accurate result i % is the one that makes the PW(i %)=0. We have learned that the interest rate at which benefits are equated with costs in a net cash flow series is called the rate of return, and at this rate, the net present value of the cash flow is equal to zero PW(i %)=0. For the subsequent cash flow series, calculate the rate of return. End of year Cash flow value ($k) 0 - 80 1 2 3 4 5 6 7 20 30 40 50 60 70 80 You need to stick to the following instructions: 1) You need to determine the rate of return using the present worth analysis. 2) The above cash flow diagram has a common series, it is expected to use its factor instead of handling each transaction individually where it takes long time. 3) Numbers are in $k meaning they are in thousands. 4) Use iterations method and a linear interpolation to appropriately approximate the solution. Hint (First and final guess should be between 40% and 50%. 5) The most accurate result i % is the one that makes the PW(i %)=0.
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To calculate the rate of return using the present worth analysis for the given cash flow series we can use the iteration method and linear interpolati... View the full answer
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