Question 1: The cash flows below have two internal rates of return. What might explain the large negative cash flow in year 5? Suggest a formula for cell B11. Suggest a formula for cell B12. A B D E F 1 TWO IRRS 2 3 Cash flow NPV of Cash Flows 4 -8,800 5 5.000 6 6,000 7 5.000 0 8 6,000 -100 0% 5% 10% 15% 30% 9 -13,500 -200 10 11 IRR1 3.4% -300 12 IRR2 17.6% -400 13 -500 14 -600 15 Discount rate 16 Question 2: Consider the cash flows below. If the relevant discount rate is 8%, would you recommend undertaking this project? State your reason. A B CONFUSING IRR Cash flow Year 0 1 2 3 4 5 1 2 Year 3 4 5 6 7 8 9 10 IRR 0 1 2 3 4 5 200 100 10,000 -3,000 -4,000 -1,000 -2,000 -3,000 10.05%