What is the Explicit Reinvestment Rate of Return (ERRR) of the proposal? Correct answer is 23.69%

A company is planning to purchase an equipment for its production. The investment proposal and estimated cash flow is tabulated below: CASH FLOW Amount (PHP) Investment cost 10,000 Expected life 5 years *Salvage value -1000 Annual receipts 8,000 Annual expenses 4,000 MARR 15% *A negative salvage value means that there is a net cost to dispose of an asset. Note: Please take note or a screenshot of the information presented here, this will be the basis of the succeeding questions. You will not be able to go back to this page. A company is planning to purchase an equipment for its production. The investment proposal and estimated cash flow is tabulated below: CASH FLOW Amount (PHP) Investment cost 10,000 Expected life 5 years *Salvage value -1000 Annual receipts 8,000 Annual expenses 4,000 MARR 15% *A negative salvage value means that there is a net cost to dispose of an asset. Note: Please take note or a screenshot of the information presented here, this will be the basis of the succeeding questions. You will not be able to go back to this page