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In: Finance

I. Determine the "internal rate of return" of the following investments. to. a. An initial payment...

I. Determine the "internal rate of return" of the following investments.
to.

a. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 1,993 for the next ten years.
b. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 2,054 for the next twenty years.
c. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 1,193 for the next twelve years.
d. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 2,843 for the next five years.

Solutions

Expert Solution

IRR is the rate at which NPV = 0

IRR is found using excel function with cash flows as the input

a. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 1,993 for the next ten years.

IRR = 15.01%

b. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 2,054 for the next twenty years.

IRR = 20.00%

c. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 1,193 for the next twelve years.

IRR = 6.00%

d. An initial payment of $ 10,000 which will produce a cash flow (NCF) annual of $ 2,843 for the next five years.

IRR = 13.03%

jeff jeffy answered 1 year ago
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