Answered: many possible IRRs could you find for…

many possible IRRs could you find for the following set of cash flows? Time 0 1 2 3 4 Cash Flow −$ 10,000 $ 5,350 $ 4,180 $ 1,520 $ 2,000 Multiple Choice 1 2 3

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section10.4: Internal Rate Of Return (irr)

Problem 2ST

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Concept explainers

Cash Flow Statement Analysis

A company's cash flow is the movement of its cash inflows and cash outflows. A cash flow statement is prepared to determine changes in an organization's cash position. A cash flow statement shows how much money was generated and spent on the business during the fiscal year. The cash flow analysis is a method of analyzing an organization's investing, financing, and operating activities. A cash flow statement reveals an organization's liquidity and solvency, as well as its ability to change cash flows in the future. It eliminates the other effects of accounting methods by improving the comparability of different organizations' operational performance.

Question

How many possible IRRs could you find for the following set of cash flows?

Time	0	1	2	3	4
Cash Flow	−$ 10,000	$ 5,350	$ 4,180	$ 1,520	$ 2,000

Multiple Choice

1
2
3
Unable to determine unless we have the cost of capital.

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