Question

In: Finance

You are considering a safe investment opportunity that requires a $870 investment​ today, and will pay...

You are considering a safe investment opportunity that requires a $870 investment​ today, and will pay $540 two years from now and another $640 five years from now.

a. What is the IRR of this​ investment?

Solutions

Expert Solution

IRR using excel is 9.02%

Year Cash flow × factor@ 9.02% Present value
0 $            (870.00) 1.0000 $                 (870.00)
1 $                      -   0.9173 $                            -  
2 $             540.00 0.8414 $                   454.34
3 $                      -   0.7718 $                            -  
4 $                      -   0.7079 $                            -  
5 $             640.00 0.6493 $                   415.57
$                            -  
NPV 3.8876 $                      (0.08)

Answer is 9.02%

jeff jeffy answered 2 years ago
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