Camila Jurez owns a successful law firm, her core business is corporate law, but occasionally Camila also works with mandates from wealthy clients requesting assistance in private legal matters. You are Camilas financial advisor, and she asks you to help her decide which of the private mandates she should accept.

You estimate that Camilas opportunity cost of capital is 15% per effective annual and that she gives up $100,000 in monthly income from corporate work (assume this income is paid at the end of each month) if she accepts a private mandate.

The following questions are independent of each other.

Camila estimates that a private client As mandate would take 3 months to complete. A has offered to pay $108,000 at the beginning (t=0) of the mandate and $200,000 one month after the end of the mandate.

Which of the following statements are false?

1. In this mandate it is not possible to calculate the internal rate of return because it does not exist.
2. In this mandate there is a multiple internal rate problem.
3. Camila must accept this mandate, as it creates value.
4. The Net Present Value of private client As mandate is $5,790.33
5. The Net Present Value of private client As mandate is $7,790.33

Only II, III and IV Only II and III Only III and V Only II and IV Only I and V