For the net cash flow series shown, (a) apply the two rules of sign change, (b) find the external rate of return using the ROIC method at an investment rate of 15% per year, and (c) determine an i* using the IRR function with and without the ROIC determined in part (b). A Year Net Cash Flow, $ 48,000 20,000 1 2 3 1 4 -90,000 3 50,000 6. -10,000 According to the rule of signs, there can be up to three rate of return values. According to the cumulative cash flow test, the i*value is inconclusiveO The external rate of return according to the ROIC method is 23.5 %. The rate of return using the IRR function is -27 O %.
For the net cash flow series shown, (a) apply the two rules of sign change, (b) find the external rate of return using the ROIC method at an investment rate of 15% per year, and (c) determine an i* using the IRR function with and without the ROIC determined in part (b). A Year Net Cash Flow, $ 48,000 20,000 1 2 3 1 4 -90,000 3 50,000 6. -10,000 According to the rule of signs, there can be up to three rate of return values. According to the cumulative cash flow test, the i*value is inconclusiveO The external rate of return according to the ROIC method is 23.5 %. The rate of return using the IRR function is -27 O %.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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