Unformatted text preview: 4,000,000 5,100,000 Salvage value 100,000 420,000 600,000 Useful life (years) 6 8 8 2. Calculate the IRR for the mixed cash flow stream below. The external rate of return is 15%. Use the method demonstrated in lecture and in section. Time CF2000 1 3600 21500 3 1000 42500 5 400 6 800 7 400 8 1000 3. A new machine to make lithium ion batteries costs $35,000. It generates an annual cash flow of $10,000. At the beginning of year 5, it must be refurbished, which will cost $20,000. The life is 10 years. At the end of its life, the machine must be disposed of, which, due to the toxic chemicals built up on the machine, will cost $25,000. The external rate of return is 12%. Find the IRR of the machine. Hint: Be careful with how you record the refurbishment cost. Textbook Problems 634, 639, 6.53, 6.56...
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