A public-private initiative in Florida will significantly expand the wind-generated energy throughout the state. The cash flow for one phase of the project involving Central Point Energy, a transmission utility company, is shown. Calculate the external rate of return

(a) using the ROIC method and a reinvestment rate of 14% per year, and

(b) using the modified ROR approach with a reinvestment rate of 14% and a borrowing rate of 7% per year. Solve by hand or spreadsheet, as requested by your instructor.

Year Cash Flow, $1,000 0 5000 1 2000 2 1500 3 7000 4 4000