An amount of R50000 is invested in a project that predicts the quarterly cash flow return over the next four years, give

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An Amount Of R50000 Is Invested In A Project That Predicts The Quarterly Cash Flow Return Over The Next Four Years Give 1 (53.52 KiB) Viewed 12 times

An amount of R50000 is invested in a project that predicts the quarterly cash flow return over the next four years, given in the table below. Quarters 2 3 5 6 9 10 11 12 13 14 15 16 Rands 1500 3000 4500 5600 5900 6400 6600 7200 7800 8000 8100 8500 X HINT: Write out the formula for the NPV and then re-arrange it to make it equal to zero. This will give a new "initial investment" value. Put it into the cash flow function and use the IRR to solve for the rate (because the equation is equal to zero). This will actually give you the bank rate. The nominal rate compounded quarterly that is offered by the bank, is equal to _________% p.a compounded quarterly (as a percentage rounded to two decimal places.) Check your answer by calculating the NPV with this bank rate and the investment value of 50000 to see that you actually get the NPV value equal to R4500. i) If the internal rate of return for this cash flow is 21,32% p.a, then the value of the payment (rounded to the nearest cent) at T16 is equal to type your answer... ii) Using your answer from (i) and the information that the NPV = R4500, see if you can use your IRR function to solve for the bank rate. HINT: Write out the formula for the NPV and then re-arrange it to make it equal to zero. This will give a new "initial investment" value. Put it into the cash flow function and use the IRR to solve for the rate (because the equation is equal to zero). This will actually give you the bank rate. The nominal rate compounded quarterly that is offered by the bank, is equal to type your answer... % p.a compounded quarterly (as a percentage rounded to two decimal places.) Check your answer by calculating the NPV with this bank rate and the investment value of 50000 to see that you actually get the NPV value equal to R4500.