Find the external rate of return (ERR) for the following project when the external reinvestment rate is $ = 10% (equal to the MARR). Is this an acceptable project? Find the external rate of return (ERR) for the following project when the external reinvestment rate is E10% (equal to the MARR). Is this an acceptable project?Year0.13.Cash Flow$15,000 $8,000 $6,000 $8,000

External Rate of return(ERR) refers to the rate of return which directly measures all the cash…

Answered: Find the external rate of return (ERR)…

Find the external rate of return (ERR) for the following project when the external reinvestment rate is $ = 10% (equal to the MARR). Is this an acceptable project?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 1P: A project has an initial cost of 40,000, expected net cash inflows of 9,000 per year for 7 years,...

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Question

Find the external rate of return (ERR) for the following project when the external reinvestment rate is $ = 10% (equal to the MARR). Is this an acceptable project?

Find the external rate of return (ERR) for the following project when the external reinvestment rate is E
10% (equal to the MARR). Is this an acceptable project?
Year
0.
1
3.
Cash Flow
$15,000 $8,000 $6,000 $8,000

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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