Determine the IRR of the following cashflow. Invest wisely! MARR=10% Year $ 0 -1000 1 200...

Determine the IRR of the following cashflow. Invest wisely! MARR=10%

Year	$
0	-1000
1	200
2	-180
3	-180
4	-180
5	500
6	-180
7	-180
8	500

Expert Solution

IRR = -12.62%

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Internal rate of return is the rate at which if we discount all the future cash flows, the resulting NPV will be zero, it is minimum rate of return that management seeks from the project, IRR of the asset/project must be greater than the required rate of return, otherwise it will not be feasible for the management to accept the project. Best way to calculate IRR is using Excel.

Year	Cash flow
0	-1000
1	200
2	-180
3	-180
4	-180
5	500
6	-180
7	-180
8	500
9	0
10	0
IRR	-12.62%
Formula	=IRR(J21:J31)

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Hope this answer your query.

Feel free to comment if you need further assistance. J

Rahul Sunny answered 2 years ago

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