Question #55794

For the cashflows, the function for evaluating the ROR is:
(Cashflow)
Year Cashflow
0 -$500
1 0
2 0
3 400
4 -50
5 300
a. -500 - 50(P/F, i, 4) + 400(P/F, i, 3) + 300 (P/F,i,5) = 0
b. -500 - 50(P/F, i, 2) + 400(P/F, i, 1) + 300 (P/F,i,3) = 0
c. 500 - 50(P/F, i, 4) + 400(P/F, i, 3) + 300 (P/F,i,5) = 0
d. None of the above

Expert's answer

Year Cashflow

0 -$500

1 0

2 0

3 400

4 -50

5 300

For the cashflows, the function for evaluating the ROR is:

ROR = -500 - 50(P/F, i, 4) + 400(P/F, i, 3) + 300 (P/F,i,5) = 0

So, the right answer is a. -500 - 50(P/F, i, 4) + 400(P/F, i, 3) + 300 (P/F,i,5) = 0

0 -$500

1 0

2 0

3 400

4 -50

5 300

For the cashflows, the function for evaluating the ROR is:

ROR = -500 - 50(P/F, i, 4) + 400(P/F, i, 3) + 300 (P/F,i,5) = 0

So, the right answer is a. -500 - 50(P/F, i, 4) + 400(P/F, i, 3) + 300 (P/F,i,5) = 0

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