Exercício 1
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You are offered an asset costing $600 that has cash fl ows of $100 at the end of each of the next
10 years.

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a. If the appropriate discount rate for the asset is 8 percent, should you purchase it?

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b. What is the IRR of the asset?

Exercício 2
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You just took a $10,000, five-year loan.

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Payments at the end of each year are flat (equal in every year) at an interest rate of 15 percent.
Calculate the appropriate loan table, showing the breakdown in each year between principal and interest. Exercício 3
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You are offered an investment with the following conditions:

• The cost of the investment is $1,000.
• The investment pays out a sum X at the end of the first year; this payout grows at the rate of 10 percent per year for 11 years.
If your discount rate is 15 percent, calculate the smallest X that would entice youto purchase the asset. For example, as you can see in the following display, X = $100 is too small—the NPV is negative.

Exercício 4
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The following cash-flow pattern has two IRRs.

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Use Excel to draw a graph of the NPV of these cash flows as a function of the discount rate. Then use the IRR function to identify the two
IRRs.

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Would you invest in this project if the opportunitycost were 20 percent?

Exercício 5
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In this exercise we solve iteratively for the internal rate of return. Consider an investment that costs 800 and has cash flows of 300, 200, 150, 122, 133 in years 1–5 (see cells A8:B13 in the following spreadsheet).

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Setting up the loan table shows that 10 percent is greater than the IRR (since the return of principal at the end of year 5 is less than the principal at the beginning of the year).

Exercício 5
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Setting the IRR? cell equal to 3 percent shows that 3 percent is less than the IRR, since the return of principal at the end of year 5 is greater than the principal at the beginning of year 5:

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