5-47. A company has the opportunity to take over a redevelopment project in an industrial area of a city. No immediate investment is required, but it must raze the existing buildings over a four-year period and, at the end of the fourth year, invest $2,400,000 for new construction.

It will collect all revenues and pay all costs for a period of 10 years, at which time the entire project, and properties thereon, will revert to the city. The net cash flows are estimated to be as follows:

Year End Net Cash Flow 1 $500,000 2 300,000 3 100,000 4 −2,400,000 5 150,000 6 200,000 7 250,000 8 300,000 9 350,000 10 400,000 Tabulate the PW versus the interest rate and determine whether multiple IRRs exist. If so, use the ERR method when ∈= 8% per year to determine a rate of return. (5.7)