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Consider the cash flow shown in the figure below. (a) Using the formula for present value of a future amount, write the formula for the

Consider the cash flow shown in the figure below.

(a) Using the formula for present value of a future amount, write the formula for the IRR (i') corresponding to this cash flow. \

cash flow : (-5000, +6000, -1000, +4000) 4 periods

(b) Solve the equation in part (a) [note, you can get the exact solution of a cubic equation, e.g. see this Wikipedia description]. Suppose the MARR is 12%, what can you conclude about the acceptability of the investment using the IRR rule? Explain your answer.

(c) Suppose that you are also given an external rate, = 12%. What can you conclude based on the ERR rule?

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