A cutting-edge product of Continental Fan had the following net cash flow series (in $1000 units) during its first 5-year period on the market. Find all rate of return values between 0% and 100%.
Rule of signs: three possible i* values.
Cumulative cash flow signs: one, positive i* value.
Write PW rate of return equation (in $1000) to find i*
0 = -50 + 22(P/F,i*,1) + 38(P/F,i*,2) - 2(P/F,i*,3) - 1(P/F,i*,4) + 5(P/F,i*,5)
Solve for i* by trial and error or spreadsheet
i* = 12.93% (spreadsheet)
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