Reference no: EM13826135

Problem:

The cash flow for an engineering project is given below:

End of year	0	1	2	3	4	5
Cash flow, $	-x	y	l-2y	1.4y	1.6y	1.8y

Where x = $3,500,000, y = $800,000 and the interest rate is z %.

Determine: 

• the equivalent uniform annual value for the cash flow, if z = 8 % annually compounding
• the payback period
• the present value of the cash flow, if z = 8 % per year - quarterly compounding
• the interest rate (the value of z), if the present value of the cash flow is $450,000
• the reinvestment rate, if the external rate of return is 6 %
• the external rate of return, if the re-investment rate is 10 % yearly compounding
• the internal rate of return

Additional Information:

This question generally belongs to the Finance as well as it discusses about computation of annual value, present value of cash flow and internal and external rate of return for a project.