For the nonconventional net cash flow series experienced over the first 3 years of operation by Viking, Inc., an Internet-based sports boat and ski equipment sales company, perform a thorough ROR analysis for the owners, Julie Merkel and Carl Upton, to include the following:
(a) Application of sign tests to determine the number and nature of the roots to the ROR equation.
(b) All real-number i* values between ?100% and +100% using the IRR function.
(c) A plot of PW versus i values indicating the i* values found in part (b).
(d) The EROR values using the MIRR method at an investment rate of 10% and various borrowing rates ranging from 4% to 14%, in 2% increments (Viking does not know currently what it will cost to borrow additional funds, if needed).
(e) The EROR value using the ROIC method at the same 10% per year investment rate.
( f ) Before you started your analysis, the owners told you they expected to realize at least a 25% per year return. With this MARR and your results, develop a short written summary for Julie and Carl’s review and understanding of the different ROR values and interpretations, that is, for all of the i*, i?, and i? values. Tell them if they are meeting their MARR.
 FIGURE 1.png)
(a) Sign changes: Descartes: 2; up to two i* values
Norstrom’s: 1; one positive i*
(a) Use ‘guess’ option in IRR function (see spreadsheet)
i1* = -67.2 and i2* = +52.6%
(b) Plot of i% vs. PW crosses at the i* values (see chart)
(d, e) EROR values resulting from the MIRR and ROIC analyses are shown on the spreadsheet
(f) Summary intentionally omitted. It’s for the learner to write.
 ANSWER.png)
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