Calculation Of Internal Rate Of Return External Rate Of Return And Shortest Duration For Project Of A Project

Question

Your company intends to establish a division in Halifax to be engaged in computer software development for the pharmaceutical industry The estimated yearly costs of the Project are given below.

The anticipated amount of yearly income generated by the Project m its first year is $X and this amount is expected to mcrease by x % m each of the following years during the n year life of the Project MARR (the minimum attractive rate of return) for the company is y %

Determine

• the internal rate of return if X = 1,270,000, x = 0, and n = 5
• the external rate of return if X = 1,000,000 x = 10, y = 12, and n = 8
• the minimum value of X that would make the Project acceptable if x = 0, y = 15, andn= 10
• the maximum value of MARR that would make the Project acceptable if X = 1,150,000, x = 0, and n = 6
• the shortest duration of Project life (in years) that would make the Project acceptable if X = 1,400,000, x = 0, and y = 12

Summary

The question belongs to Finance and it discusses about calculation of internal rate of return, external rate of return and shortest duration of a project.

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