What is the annual rate earned on the investments portfolio

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Reference no: EM131340049

1. A company invests $500,000 at the beginning of the year. It withdraws $45,000 at the beginning of the second quarter, and $55,000 at the beginning of the third quarter. The company invested an additional $100,000 at the beginning of the fourth quarter. The company earned $20,000 of interest during the first quarter, $15,000 in the second quarter, $10,000 in the third quarter, and $22,000 in the fourth quarter. What is the annual rate earned on the investments portfolio?

a. 13.73%

b. 15.25%

c. 16.94%

d. 14.18%

2. A firm utilizes a strategy of capital rationing, which is currently $375,000 and is considering the following two projects: Project A has a cost of $335,000 and the following cash flows: year 1 $140,000; year 2 $150,000; and year 3 $100,000. Project B has a cost of $365,000 and the following cash flows: year 1 $220,000; year 2 $110,000; and year 3 $150,000. Using a 6% cost of capital, what is the internal rate of return of project B?

a. Higher than 6%

b. Lower than 6%

c. Exactly 6%

d. Can not be determined from the given information

Reference no: EM131340049

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