Solution by Spreadsheet
Figure 8–1 shows the incremental cash fl ows for the LCM of 24 years. As in the hand tabulation,
reinvestment is made in the last year of each intermediate life cycle. The incremental
values in column D are the result of subtractions of column B from C.
Note that the fi nal row includes a summation check. The total incremental cash fl ow should
agree in both the column D total and the subtraction C29 B29. Also note that the incremental
values change signs three times, indicating the possibility of multiple i* values, per Descartes’
rule of signs. This possible dilemma is discussed later in the chapter.