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 + ? ?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text: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
+
?
?
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