what is the irr of the following set of cash flows? what is the irr of the following set of cash flows?
what is the irr of the following set of cash flows?
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IRR = 18.32%
Explanation:
(i) Internal rate of return =
0 = –$16,600 + $7,300 / (1 + IRR) + $8,600 / (1 + IRR)2 + $7,100 / (1 + IRR)3
Using a spreadsheet, financial calculator, or trial and error to find the root of the equation, we find that:
IRR = 18.32%
(ii) Internal rate of return =
Year Cash Flow
0 -$16,600
1 7,300
2 8,600
3 7,100
IRR = =IRR(D18:D21)
IRR = 18.32%