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4. Roscoe Restanrant is evaluating the potential to modify their service line. They expect to the cush flows with this project: -1,200 358 358 358 358 358 394 Compute the rate of returo on the SI 200 investment to within .1% Show your work [25 pts lint: Less than 9%.

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Answer #1

Rate of Return= (cash flow received - cashflow invested/cashflow invested ) ×100

Thus cash flow received = sum of positive cash flow =1790

Cash flow invested = sum of negative cashflows= 1594

Thus, Rate of Return= (1790-1594/1790) × 100 =10.94%

Using Internal rate of return calculator where net present value of cahs flow becomes zero, we can compute all cash flows on excel sheet.

Thus, the Internal Rate of Return at 1% interval for above cahs flow comes to 7%.

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