8. 6.57 Your friend owns a company that makes clutch disks for race cars.

He had the net cash flows shown for one department over a 4-year period after making an improvement investment of $65,000.

1. Apply the two sign rules first, then calculate the internal rate of return.

2. Calculate the external rate of return using the ROIC method manually with a reinvestment rate of 15% per year.

3. Calculate the external rate of return using the MIRR method manually with a reinvestment rate of 15% per year and a borrowing rate of 8% per year.

4. Rework parts

(b) and

(c) using spreadsheet functions.

Year 0 1 2 3 4 NCF, $1000 −65 30 84 −10 −12