Calculating IRR and YTM
I am having difficulty finding the correct formula for calculating the yield to maturity and internal rate of return. I am not a finance major and find this very difficult
Could you do problems 6-20 and 6-38 orn give a hint on how to complete?
(See attached file for full problem description)
Here are the cash flows for two mutually exclusive projects:
Project C0 C1 C2 C3
A ($20,000) $8,000 $8,000 $8,000
B ($20,000) 0 0 $25,000
a. At what interest rates would you prefer project A to B?
b. What is the IRR of each project?
Growth Enterprises believes its latest project, which will cost $80,000 to install, will generate a perpetual
growing stream of cash flows. Cash flow at the end of this year will be $5,000 and cash flows in future
years are expected to grow indefinitely at an annual rate of 5 percent.
a. If the discount rate for this project is 10 percent, what is the project NPV?
b. What is the project IRR?
This question has the following supporting file(s):
The solution explains how to calculate internal rate of return and yield to maturity
This answer includes:
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- Attached file(s)
- brain mass 6.xls