Harley worked for many years to save enough money to start his own residential landscape design business. The net cash flows shown are those he recorded for the first 6 years as his own boss. Find the external rate of return using the modified rate of return approach with a reinvestment rate of 15% per year and a borrowing rate of 8%. Additionally, after using the procedure, use the MIRR function to confirm your answer. Year NCF, $ -9,000 2 3 4 12,000 700 6 750 4,100 -3,400 -7,000 The external rate of return is % per year. The spreadsheet function is =RATE(6,-17472,25672)
Harley worked for many years to save enough money to start his own residential landscape design business. The net cash flows shown are those he recorded for the first 6 years as his own boss. Find the external rate of return using the modified rate of return approach with a reinvestment rate of 15% per year and a borrowing rate of 8%. Additionally, after using the procedure, use the MIRR function to confirm your answer. Year NCF, $ -9,000 2 3 4 12,000 700 6 750 4,100 -3,400 -7,000 The external rate of return is % per year. The spreadsheet function is =RATE(6,-17472,25672)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Harley worked for many years to save enough money to start his own residential landscape design business. The net cash flows shown are those he recorded for the first 6 years as his own boss. Find the external
Transcribed Image Text:Harley worked for many years to save enough money to start his own residential
landscape design business. The net cash flows shown are those he recorded for the first
6 years as his own boss. Find the external rate of return using the modified rate of return
approach with a reinvestment rate of 15% per year and a borrowing rate of 8%.
Additionally, after using the procedure, use the MIRR function to confirm your answer.
4
12,000 700
Year
1
5
2
-3,400
3
NCF, $ -9,000
4,100
|-7,000
750
The external rate of return is
% per year.
The spreadsheet function is =RATE(6,-17472,25672) v
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