The following cash-flow pattern has two IRRs. Use Excel to draw a graph of the NPV of
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Question:
The following cash-flow pattern has two IRRs. Use Excel to draw a graph of the NPV of these cash flows as a function of the discount rate. Then use the IRR function to identify the two IRRs. Would you invest in this project if the opportunity cost were 20%?
| A | B |
4 | Year | Cash flow |
5 | 0 | -500 |
6 | 1 | 600 |
7 | 2 | 300 |
8 | 3 | 300 |
9 | 4 | 200 |
10 | 5 | -1,000 |
Related Book For
Money Banking and Financial Markets
ISBN: 978-0078021749
4th edition
Authors: Stephen Cecchetti, Kermit Schoenholtz
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