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1 2 3 Now, consider an investment with the following string of cash flows: Cash Flow Profile Year CF 0 $ (4,000.00) $ 16,400.00 $(22,320.00)
1 2 3 Now, consider an investment with the following string of cash flows: Cash Flow Profile Year CF 0 $ (4,000.00) $ 16,400.00 $(22,320.00) $ 10,080.00 a) Calculate the NPV for this investment using and set of interest rates from 10% to 60%, in increments of 5%. b) Provide a Line Graph of NPV in the Y-axis, against the interest rate in the X-axis. c) Based on the graph you provided, what issues can you see that could arise on calculating the IRR for this project? d) Now, using the following formula, calculate the External Rate of Return (ERR) of the cashflows above, assuming a yield of 10%: + ERRE = Eco (2 fois " Where R represents the positive values of the cash flow, and Crepresent the negatives values of the cash flows, and y would be the yield used to discount the cash flows (y is also called the reinvestment rate, and it is sometimes denoted as MARR). Hint: you can use the Goal Seek function in Excel to do this
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