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
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 |
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