Question

a. The CEO first notices that he could always turn multiple negative cash flows into a single negative cash flow by adding all the negative cash flows together, getting that much money at time 0, and just holding onto it until he needs to make the payments. Calculate the IRR of the above cash flow stream if all the negative cash flows are moved to year 0

Answer 1

Answer: 11.32%

Explanation:

Time cash flow

Year 0-$8,000.00

Year 1$2,000.00

Year 2$500.00

Year 3$8,000.0

IRR= 11.32%