Question 5.

Consider a project with the following cash flows: CF0 = $600, CF1 = $1,110, CF2 = $700, CF3 = $600, and CF4 = $1, 200. Use Excel to answer the following questions:

1. (a)Plot the project's NPV as a function of the discount rate r
2. (b)Calculate the internal rate of return of this investment opportunity. Would you pursue this project
3. if the opportunity cost of capital is 10%? 50%? 60%?
4. (c)Calculate the NPV of this investment opportunity under discount rate of 12%. Would you accept this project based on the NPV rule?

(Note: you do not need to submit the Excel file, just the printout of a graph.)