a. Calculate the IRR for each of the three cash-flow diagrams that follow. Use EOY zero for (i) and EOY four for (ii) and (iii) as the reference points in time. What can you conclude about the “reference year shift” and “proportionality” issues of the IRR method?  

b. Calculate the PW at MARR=10 % per year at EOY zero for (i) and (ii) and EOY four for (ii) and (iii). How do the IRR and PW methods compare?

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5-60. a. Calculate the IRR for each of the three cash-flow diagrams that follow. Use EOY zero for (i) and EOY four for (ii) and (iii) as the reference points in time. What can you conclude about “reference year shift" and "proportionality" issues of the IRR method? b. Calculate the PW at MARR = 10% per year at EOY zero for (i) and (ii) and EOY four for (ii) and (iii). How do the IRR and PW methods compare? $300 $300 $300 $300 $300 i. 1 2 3 4 End of Year $1,000 $300 $300 $300 $300 $300 4 ii. 5 7 8 9. End of Year $1,000 $1,500 $1,500 $1,500 $1,500 $1,500 4 iii. 5 6 7 8 9. End of Year $5,000 : 5-60. a. Calculate the IRR for each of the three cash-flow diagrams that follow. Use EOY zero for (i) and EOY four for (ii) and (iii) as the reference points in time. What can you conclude about “reference year shift" and "proportionality" issues of the IRR method? b. Calculate the PW at MARR = 10% per year at EOY zero for (i) and (ii) and EOY four for (ii) and (iii). How do the IRR and PW methods compare? $300 $300 $300 $300 $300 i. 1 2 3 4 End of Year $1,000 $300 $300 $300 $300 $300 4 ii. 5 7 8 9. End of Year $1,000 $1,500 $1,500 $1,500 $1,500 $1,500 4 iii. 5 6 7 8 9. End of Year $5,000 :

Answer rating: 100% (QA)

Answer Solution Yean A Year 6 l000 300 300 2 300 300 loo0 So 00 300 300 ISoo IRR 1524 300 1S00 1... View the full answer