How Many Possible IRRs Could You Find for the Following

question 97

Multiple Choice

How many possible IRRs could you find for the following set of cash flows?
$$\begin{array} { l c c c c c c } \text { Time } & 0 & 1 & 2 & 3 & 4 \\\text { Cash Flow } & - \$ 10,000 & \$ 5,350 & \$ 4,180 & \$ 1,520 & \$ 2,000\end{array}$$

• A) 1
• B) 2
• C) 3
• D) Unable to determine unless we have the cost of capital.

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Definitions:

No-par Common Stock

Common stock issued without a par value which means it is not assigned a nominal or face value, but it still represents ownership in a company.

Stated Value

A nominal value assigned to a corporation's stock that bears no relation to its market price, used for calculating capital stock.

Par Preferred Stock

A type of preferred stock that has a nominal face value, which is the amount paid out to shareholders during liquidation before common stockholders.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with dividends that are paid out prior to those to common stockholders.