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7. Consider the following cash flow profile and assume MARR is 10 percent/year. EOY 0 1 2 3 4 5 6 NCF -$100 $800 -$750
7. Consider the following cash flow profile and assume MARR is 10 percent/year. EOY 0 1 2 3 4 5 6 NCF -$100 $800 -$750 $900 -$950 $700 $800 a. What does Descartes' rule of signs tell us about the IRR(s) of this project? b. What does Norstrom's criterion tell us about the IRR(s) of this project? c. Determine the IRR(s) for this project. d. Is this project economically attractive?9. An engineer prepares a report to evaluate a project using PW and IRR. Just before submitting the report, he spills coffee on it, making the first digit of the 2-digit IRR unreadable. The second digit is a 2. The PW is negative and MARR is 15 percent. He doesn't have time to redo the analysis. Can you help him figure out the IRR?11. Draw a cash flow diagram of any investment that exhibits both of the following properties: 1. The investment has a 4-year life. 2. The investment has a 10 percent/year internal rate of return.13. Nu Things, Inc, is considering investing in a business venture with the following anticipated cash ow results: Assume MARE is 20 percent per year. Based on an internal rate of return analysis, (1) determine the investment's worth, (2} state whether or not your results indicate the investment should be undertaken, and (3) state the decision rule you used to arrive at this conclusion. 35. The four alternatives described below are being evaluated: Alternative W X Y Z Initial Investment $100,000 $75,000 $40,000 $200,000 IRR 16% 15% 29% 14% The Incremental IRRs are: IRRw-Y = 7% IRRw-x = 20% IRRx-Y = 1% IRRz-x = 14% IRRZY = 10% IRRz.w = 12% a. If the alternatives are independent, which one(s) should be selected if MARR = 15.5 percent/year? b. If the alternatives are mutually exclusive, which one(s) should be selected if MARR = 9.5 percent/year
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