Problem 5-10 Problems with IRR

Suppose you are offered $8,200 today but must make the following payments:

Year	Cash Flows ($)
0	$ 8,200
1	?4,500
2	?3,200
3	?2,300
4	?1,100

a.	What is the IRR of this offer? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

IRR

%

b.

If the appropriate discount rate is 11 percent, should you accept this offer?

	Reject
	Accept

c.

If the appropriate discount rate is 22 percent, should you accept this offer?

	Accept
	Reject

d-1.	What is the NPV of the offer if the appropriate discount rate is 11 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

NPV

$

d-2.	What is the NPV of the offer if the appropriate discount rate is 22 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

NPV

$