A project does not necessarily have a unique IRR. (Refer to the previous problem for more information on IRR.) Show that a project with the following cash flows has two IRRs: year 1, – $20; year 2, $82; year 3, – $60; year 4, $2. (It can be shown that if the cash flow of a project changes sign only once, the project is guaranteed to have a unique IRR.)

Data from Previous Problem:

The IRR is the discount rate r that makes a project have an NPV of $0. You can find IRR in Excel with the built-in IRR function, using the syntax = IRR(range of cash flows). However, it can be tricky. In fact, if the IRR is not near 10%, this function might not find an answer, and you would get an error message. Then you must try the syntax = IRR(range of cash flows, guess), where “guess” is your best guess for the IRR. It is best to try a range of guesses (say, 290% to 100%). Find the IRR of the project described in Problem 34.