A company that makes clutch disks for race cars has the annual net cash flows shown for one department. Year NCF, $1000 0 −65 1 30 2 84 3 −10 4 −12 (a) Determine the number of positive roots to the rate of return relation. (b) Calculate the internal rate of return. Is there a negative root? How is it treated? (c) Calculate the external rate of return using the return on invested capital (ROIC) approach with an investment rate of 15% per year (as assigned by your instructor, solve by hand and/or spreadsheet).

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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A company that makes clutch disks for race cars has
the annual net cash flows shown for one department.
Year NCF, $1000
0 −65
1 30
2 84
3 −10
4 −12
(a) Determine the number of positive roots to the
rate of return relation.
(b) Calculate the internal rate of return. Is there a
negative root? How is it treated?
(c) Calculate the external rate of return using the
return on invested capital (ROIC) approach
with an investment rate of 15% per year (as
assigned by your instructor, solve by hand
and/or spreadsheet).

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