a) Suppose you invest 100 thousand dollars in a bank account. After 2 years you get 110 thousand dollars. Assume yearly compounding.

i. Draw the cash flow diagram.

ii. Find the Internal Rate of Return (IRR) of the investment. Is this

investment attractive if MARR=10%?

iii. Find the External Rate of Return (ERR) by using a MARR %10. Is this

investment attractive?

b) Suppose you deposit 100 thousand dollars in a bank account for two years. After one year, you withdraw 5 thousand dollars from your account. After 2 years, you get 110 thousand dollars and close your account. Assume yearly

compounding.

i. Draw the cash flow diagram.

ii. Find the internal rate of return (IRR) both by hand and by using Excel. Is

this investment attractive if MARR=10%?

iii. Find the External Rate of Return (ERR) by using a MARR %10. Is this

investment attractive?