2. Consider the investment with the following cash flows.

Year Cash Flow

0 -6,500

1 19,500

2 -12,000

3 -3,000

a) Do a Graphical Analysis to identify the roots for the equation NPW(i)=0. Plot the NPW(i) for a reasonably large range. What can you say about the rate of return of this project?

b) Apply MIRR using an external financing rate of 6% and an external investing rate of 12%. Is the project attractive if MARR is 12%? Compute MIRR analytically first, then verify your answer using MIRR function of Excel.

c) Apply ERR using MARR of 12%. Is the project attractive?