Problem # 2 (3/10): A cash flow sequence has a disbursement of $15,000 today, followed by three receipts of $8,000 at the end of year one, two and three. A final disbursement of $3,000 occurred at the end of year 4. The MARR is 10%. Check if this cash flow sequence is "simple"? If the cash flow sequence is 'simple', calculate the IRR for this project. If the cash flow sequence is NOT 'simple', calculate the approximate-ERR for this project. Decide whether the project should be accepted or not.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Problem # 2 (3/10): A cash flow sequence has a disbursement of
$15,000 today, followed by three receipts of $8,000 at the end of
year one, two and three. A final disbursement of $3,000 occurred
at the end of year 4. The MARR is 10%. Check if this cash flow
sequence is "simple"? If the cash flow sequence is 'simple',
calculate the IRR for this project. If the cash flow sequence is NOT
'simple', calculate the approximate-ERR for this project. Decide
whether the project should be accepted or not.
Transcribed Image Text:Problem # 2 (3/10): A cash flow sequence has a disbursement of $15,000 today, followed by three receipts of $8,000 at the end of year one, two and three. A final disbursement of $3,000 occurred at the end of year 4. The MARR is 10%. Check if this cash flow sequence is "simple"? If the cash flow sequence is 'simple', calculate the IRR for this project. If the cash flow sequence is NOT 'simple', calculate the approximate-ERR for this project. Decide whether the project should be accepted or not.
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