Jenco Electric manufactures washdown adjustable speed drives in open loop, encoderless, and closedloop servo configurations. The net cash flow associated with one phase of the production operation is shown below. (a) Determine the possible rate of return values according to the rule of signs. (b) Determine the changes of sign in the cumulative cash flow series. What does this mean? (c) Write the PW relation to determine i* values. Use the IRR function to display it. Year Net Cash Flow, $ 0 −40,000 1 32,000 2 18,000 3 −2000 4 −1000

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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Chapter11: Capital Budgeting And Risk
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Jenco Electric manufactures washdown adjustable
speed drives in open loop, encoderless, and closedloop
servo configurations. The net cash flow associated
with one phase of the production operation
is shown below.
(a) Determine the possible rate of return values
according to the rule of signs.
(b) Determine the changes of sign in the cumulative
cash flow series. What does this mean?
(c) Write the PW relation to determine i* values.
Use the IRR function to display it.
Year Net Cash Flow, $
0 −40,000
1 32,000
2 18,000
3 −2000
4 −1000

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