Consider once again the project with the cash flows described below. Determine whether this is a simple or non- simple investment AND how many possible values of i* exist using the Accumulated Cash Flow Sign Test. A0 = -$7,500, A1 = 4,200, A2 = 3,675, A3 = -2,625, A4 = 5,250, A5 = -1,050, A6 = 1,575, A7 = 675, A8 = -3,000, A9 = 750, A10 = 750
Simple investment, at most 1 i* value
Non-simple investment, at most 1 i* value
Simple investment, at most 3 i* values
Non-simple investment, at most 3 i* values
Simple investment, at most 7 i* values

The correct option is (D)

Explanation:

Using the accumulated cash flow sign test,

- This investment is a non-simple investment.

This is because the net cash flow changes sign (to positive and back to negative) more than once, during the study period.

- There are at most 3 i* values. That is values for Internal Rate of Return. This is owing to the multiple change in sign during the period.

The correct answer is option D - Non simple investment with at most 3 values for internal rate of return (i*)

since the options are not listed, when you are working on your budget you should also add water, tv, internet, miscellaneous and your 'fun' money for in your budget. when budgeting, you need to allow for fun money, and mis/accidental money so that you stick to the budget and not go crazy because you feel strapped to the budget.