Question
The IRR rule suffers from several drawbacks, one of which has to do with projects of unconventional cash flows. In this assignment, we will be
The IRR rule suffers from several drawbacks, one of which has to do with projects of "unconventional cash flows." In this assignment, we will be able to demonstrate why unconventional cash flows disqualifies IRR.
Use the table below to create a plot of discount rate vs NPV. Please use the following range of discount rates: 0% to 85% at 5% increments.
Year | Cash Flows |
0 1 2 3 4 5 | -170 160 160 160 160 -520 |
Use your Excel work to answer the questions below.
What is the NPV using the discount rate of 5%?
What is the NPV using the discount rate of 10%?
What is the NPV using the discount rate of 65%?
What is the NPV using the discount rate of 70%?
Why is the IRR inappropriate for this particular project? State in 1-2 sentences.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started