You have a project with the net cash flow summarized below. The project is not suitable for direct reinvestment, so incoming revenue will be placed into an external account that yields 2.5%. (The "External Reinvestment Rate" is 2.5%). What is the ERR for this project? (Provide your answers in digits only with 2 decimal places. No comas or pesos or percent.)
You have a project with the net cash flow summarized below. The project is not suitable for direct reinvestment, so incoming revenue will be placed into an external account that yields 2.5%. (The "External Reinvestment Rate" is 2.5%). What is the ERR for this project? (Provide your answers in digits only with 2 decimal places. No comas or pesos or percent.)
Chapter1: Making Economics Decisions
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Problem 1QTC
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You have a project with the net cash flow summarized below. The project is not suitable for direct reinvestment, so incoming revenue will be placed into an external account that yields 2.5%. (The "External Reinvestment Rate" is 2.5%). What is the ERR for this project? (Provide your answers in digits only with 2 decimal places. No comas or pesos or percent.)
![Year
0
1
2
3
4
5
6
7
Cash Flow
-25,000
5,500
6,500
-1,000
4,500
5,500
7,000
5,500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2ec12e67-d805-41a7-839f-4700a44355ec%2F93187127-27db-4460-99e9-0ba5c46642b4%2Fsibbuc_processed.png&w=3840&q=75)
Transcribed Image Text:Year
0
1
2
3
4
5
6
7
Cash Flow
-25,000
5,500
6,500
-1,000
4,500
5,500
7,000
5,500
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Referring to the cash-flow diagram. Determine the IRR.
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