A third-year college friend of yours opened Mike’s Bike Repair Shop when he was a freshmen working on a sociology degree. He shared his NCF figures for the 3 years, including the $17,000 amount that it took to get started in business.
(a) Determine the number of possible rate of return values.
(b) Find all i* values between ?50% and 110% by plotting PW versus i* for your friend. (Use 20% increments.)
 FIGURE 1.png)
(a) Three sign changes in NCF series; three possible i* values. Norstrom’s
criterion also indicates that there may be more than one i* value.
(b) IRR equation is: 0 = -17,000 + 20,000(P/F,i*,1) - 5000(P/F,i*,2) + 8000(P/F,i*,3)
i* = 24.4% per year
Plot of PW versus i* crosses x-axis only once at i* = 24.4%
 ANSWER.png)
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