A company has the opportunity to take over a redevelopment

jagguarpaw January 6, 2017 0 Comments

Question: A company has the opportunity to take over a redevelopment

A company has the opportunity to take over a redevelopment project in an industrial area of a city. No immediate investment is required, but it must raze the existing buildings over a four-year period and, at the end of the fourth year, invest$2,200,000

for new construction. It will collect all revenues and pay all costs for a period of1010

years, at which time the entire project, and properties thereon, will revert to the city. The net cash flows are estimated to be as shown on the right.Tabulate the PW versus the interest rate and determine whether multiple IRRs exist. If so, use the ERR method whenepsilonεequals=10%

per year to determine a rate of return.LOADING…

Click the icon to view the interest and annuity table for discrete compounding when the MARR is10%

per year.

Year End Net Cash Flow
1 $460,000
2 $270,000
3 90,000
4 −2,200,000
5 140,000
6 190,000
7 240,000
8 290,000
9 340,000
10 390,000

There is/are

two

IRR value(s) for the given net cash-flow sequence.The first IRR value is

nothing%.

(Round to one decimal place.)