A company that makes clutch disks for race cars has the annual net cash flows shown for one department.
What will be an ideal response?
(a) Descartes’ rule of signs: 2 sign changes; up to two i* values
Norstrom’s criterion: series starts negative; 1 sign change; one positive root
(b) 0 = -65 + 30(P/F,i*,1) + 84(P/F,i*,2) – 10(P/F,i*,3) – 12(P/F,i*,4)
Solve for i* by trial and error or spreadsheet
i* = 28.6% per year (spreadsheet)
A negative root of -56.0% is discarded. It can be displayed using = IRR(B1:B5,-50%)
(c) Apply net-investment procedure steps because the investment rate i i = 15% is not
equal to i* rate of 28.6% per year.
You might also like to view...
Which of the following is less dense?
A) Steam B) Hot water C) Warm water D) Cold water
What types of material are used to sense humidity in humidistats?
What will be an ideal response?
Describe the overhead GMAW welding position.
What will be an ideal response?
Commands, instructions to computer programs, are arranged in groups and might display as any of the following EXCEPT:
a) Button. b) Box. c) Arrow. d) Menu.