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Unformatted text preview: = = = = =m and therefore, IRR 1 = x 1 1 = 10%, and IRR 2 = x 2 1 = 20%. H OMEWORK Q UESTIONS : 1. Suppose we are given that C = $1 million; C 1 = $6 million; and C 2 = $6.75 million. Work out the two solutions for the IRR. We are given that a = 1, b = 6, and c = 6.75. Therefore, b 2 4 ac = 9, and x 1 = 1.5, and x 2 = 4.5, which in turn leads to IRR 1 = 50%, and IRR 2 = 350%. These are shown in the graph below: 2. Suppose we are given that C = $20 million; C 1 = $48 million; and C 2 = $28.4875 million. Work out the two solutions for the IRR. We are given that a = 20, b = 48, and c = 28.4875. Therefore, b 2 4 ac = 25, and x 1 = 1.075, and x 2 = 1.325, which in turn leads to IRR 1 = 7.5%, and IRR 2 = 32.5%. These are shown in the graph below: Solution to Homework 6 Solution to Homework 6...
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This note was uploaded on 04/30/2010 for the course L&S 101 taught by Professor Chow during the Spring '10 term at University of California, Berkeley.
 Spring '10
 CHOW

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