Find IRR for following cash flows:

0_____1_____2_____3_____4

($100) $10 $10 $10 $110

a) use calculator, make sure that you know the procedure.

p/yr=____, N=____, PMT=_____, FV=_____,PV=_____, IRR=____% per period.

b) use spreadsheet, make sure that you know the procedure

Show spreadsheet printout

c) use intuition: if initial cashflow is changed to (90) the IRR will be Higher/lower because _________________________________

Hint: Consider the impact of a higher discount rate on the PV of a given set of cash flows.

6) The Stated rate i=10% per year compounded semi-annually. The Effective annual rate is __________%

a) use built-in calculator functions

b) use formula

7) Term structure: Two-year rate is i=5% per year

Three-year rate is i=6% per year

Find the implied forward rate for the third year. i=_____%