Consider the cash flow (a, a2, a3) = (-2,1,-1), where a; is the payment at the...
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Consider the cash flow (a₁, a2, a3) = (-2,1,-1), where a; is the payment at the beginning of year i for i = 0, 1, 2. (a) Show that this cash flow does not have an Internal Rate of Return. (b) Why is this cash flow not subject to the theorem proved in lectures about the existence of an Internal Rate of Return r satisfying -1 <r<∞o. Consider the cash flow (a₁, a2, a3) = (-2,1,-1), where a; is the payment at the beginning of year i for i = 0, 1, 2. (a) Show that this cash flow does not have an Internal Rate of Return. (b) Why is this cash flow not subject to the theorem proved in lectures about the existence of an Internal Rate of Return r satisfying -1 <r<∞o.
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