According to Descartes rule of signs for the net cash flow s

According to Descartes’ rule of signs, for the net cash flow sequence below

Yr

Cash Flow

0

-100

1

-20

2

40

3

40

4

-20

5

40

the maximum number of possible i values is

Select one:

a. 2

b. 5

c. 4

d. 3

Yr	Cash Flow
0	-100
1	-20
2	40
3	40
4	-20
5	40

below According to Descartes\' rule of signs, for the net cash flow sequence ash Flow 100 20 40 Yr 20 the maximum number of possible i values is

Solution

According to Descartes\'s rule of sign , the maximum number of i should be less than or equal to the number of times the sign has changed in net cash flow statement.

Here the sign has changed from year 1 to year 2 (- to +) ,then from year 3 to 4(+ to -) and finally from year 4 to 5 (- to+)

So the toyal sign changes are 3.

Hence the maximum possible value of i will be 3 ie option D