`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%