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DSC1630 Assignment 04 2021 AS PER UPDATED TUTORIAL LETTER

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  • April 29, 2021
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DSC1630

Introductory Financial Mathematics

Department of Decision Sciences

Assignment 04 for 2021 AS PER UPDATED TUTORIAL
LETTER

Unique assignment number: 293441
Due Date: 30 July 2021




Question 1

An investment with an initial outlay of R500 000 generates five successive annual cash
inflows of R75 000, R190 000, R40 000, R150 000 and R180 000 respectively. The internal
rate of return (IRR) is

[1] 7,78%.
[2] 27,0%.
[3] 9,48%.
[4] 21,3%.
[5] none of the above.

Answer:

The internal rate of return method (IRR) determines the interest rate that equates future
returns to the present investment outlay.

Using the Sharp EL-138F calculator:

, OR:

75 000 190 000 40 000 150 000 180 000
0= + (1+𝑅)2
+ (1+𝑅)3 + (1+𝑅)4
+ (1+𝑅)5
− 500 000
1+𝑅

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