1 2 The following cash flow pattern has two IRRs. Use Excel to draw a graph of the NPV of these cash flows as a function of the discount rate. Then use the IRR function to identify the two IRRS. Would you invest in this project if the opportunity cost were 30%? 3 Discount rate 10.00% -34.96 Data table 4 NPV S Year Cash flow 6 7 0 -300 8 1 300 9 2 200 10 3 150 11 4 122 12 5 133 13 6 -800 14 15 IRR 1 16 IRR2 17 18 19 + ? ?
1 2 The following cash flow pattern has two IRRs. Use Excel to draw a graph of the NPV of these cash flows as a function of the discount rate. Then use the IRR function to identify the two IRRS. Would you invest in this project if the opportunity cost were 30%? 3 Discount rate 10.00% -34.96 Data table 4 NPV S Year Cash flow 6 7 0 -300 8 1 300 9 2 200 10 3 150 11 4 122 12 5 133 13 6 -800 14 15 IRR 1 16 IRR2 17 18 19 + ? ?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 16EB: Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two,...
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