Determine the minimum and maximum internal rate of return for the following cash flow. Use Excel....

Determine the minimum and maximum internal rate of return for the following cash flow. Use Excel.

Year	Net Cash
0	-2500
1	1500
2	1000
3	-1500
4	900
5	500

Expert Solution

For the project with the following cash flows ,

Year	Net CF
0	-2500
1	1500
2	1000
3	-1500
4	900
5	500

The IRR is calculated as

=IRR($C$4:$C$9,F5)

Where the range is the range of Cashflows and the rate is the Guess rate for the multiple IRR

So we get the Minimum IRR = -2%

Year	Net CF
0	-2500
1	1500
2	1000
3	-1500
4	900
5	500

IRR	-2%

If we plot the data of NPV at various discount rate

And then plot them in IRR graph as

We find the maximum IRR approaches to infinity

.

Thanks

jeff jeffy answered 1 year ago

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