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Internal rate of return/required return

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Hello,

Attached you will find two finance problems. Please show all the formulas and steps for both of the problems so that they can be understood completely.

Thank you

Finance Questions
1. Calculate the internal rate of return on the following projects. Make sure to include all calculator key strokes or show Excel worksheet calculations.

A. Initial outlay of $50,000 with an after-tax cash flow of $10,000 per year for eight years

B. Initial outlay of $600,000 with an after-tax cash flow of $120,000 per year for ten years

C. Initial outlay of $25,000 with an after-tax cash flow $11,500 per year for three years

2. The risk-free rate of interest is 4% and the market risk premium is 7%. Hughes Corporation has a beta of 1.3, and last year generated a return of 11% with a standard deviation of returns of 15%. The required return on Hughes Corporation stock is:

A) 13.1%
B) 12.2%
C) 11%
D) 11.5%

Show all formulas and steps so that the logic behind each problem can be understood.

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Solution Summary

The solution explains how to calculate the internal rate of return and the required rate of return.

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