How many IRRs could be estimated for each project below: Project A has ________ (1, 2.3. or 4) IRR(s). Project B has __________ (1,2,3, or 4) IRR(s). Project C has ____________ (1,2,3, or 4) IRR(s). Project D has___________ (1,2,3, or 4) IRR(s).
How many IRRs could be estimated for each project below: Project A has ________ (1, 2.3. or 4) IRR(s). Project B has __________ (1,2,3, or 4) IRR(s). Project C has ____________ (1,2,3, or 4) IRR(s). Project D has___________ (1,2,3, or 4) IRR(s).
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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How many IRRs could be estimated for each project below:
Project A has ________ (1, 2.3. or 4) IRR(s).
Project B has __________ (1,2,3, or 4) IRR(s).
Project C has ____________ (1,2,3, or 4) IRR(s).
Project D has___________ (1,2,3, or 4) IRR(s).
Transcribed Image Text:### Cash Flow Analysis of Four Projects
The table below represents the annual cash flows for four different projects, labeled A, B, C, and D, over a six-year period. The values are given in currency units (e.g., dollars, euros). Negative values indicate an outflow of cash (i.e., costs), whereas positive values indicate an inflow of cash (i.e., revenues).
| Year | Project A | Project B | Project C | Project D |
|------|------------|------------|------------|------------|
| 1 | -10000 | -10000 | -10000 | -10000 |
| 2 | 4000 | 4000 | 4000 | 0 |
| 3 | 4000 | 4000 | -4000 | 4000 |
| 4 | 4000 | 4000 | 4000 | 4000 |
| 5 | 4000 | 4000 | 4000 | 4000 |
| 6 | 4000 | -15000 | -15000 | 4000 |
### Explanation of the Table:
- **Year**: Represents the specific year of the project.
- **Project A**:
- An initial investment of -10,000 in Year 1.
- Positive cash flows of 4,000 from Year 2 to Year 6.
- **Project B**:
- An initial investment of -10,000 in Year 1.
- Positive cash flows of 4,000 from Year 2 to Year 6, with a significant outflow of -15,000 in Year 6.
- **Project C**:
- An initial investment of -10,000 in Year 1.
- Positive cash flows of 4,000 in Years 2, 4, 5, and negative outflows of -4,000 in Year 3 and -15,000 in Year 6.
- **Project D**:
- An initial investment of -10,000 in Year 1.
- Zero cash flow in Year 2, positive cash flows of 4,000 in Years 3 to 6.
### Usage:
This table can be used for evaluating the financial viability of
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