Charles Enterprises got into the drone manufacturing business at the inception of the technology. Net cash flows (in $ million units) for years 0 through 5 had its ups and downs as shown below. However, a few years ago, Charles started selling 3-D printable, disposable drones that can be printed, assembled, and launched with different types of sensors in remote locations—ships, isolated land areas, etc. The net cash flows for the last 5 years have improved considerably. With the assistance of the “guess” option in the IRR function, perform a thorough analysis of the NCF series using the following questions.
(a) Find all i* values between ?100% and +100% for the NCF series for years 0 through 5.
(b) Find all i* values for the years 0 through 10.
(c) Did the i* analysis reflect the two sign change rule predictions with this range of i* for the 5-year period? For the 10-year period?
(d ) Plot i* versus PW for years 0–5 and years 0–10 using two scatter charts.
(a) i1* = -18.38% and i2* = 8.79%
(b) i* = 15.03%
(c) Yes for 0 to 5-year period; no for 0 to 10-year period
(d) Plots are shown
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