Comments

  1. avatar says

    Thank you for help.
    One question though..in the test post the chapter I’m not understanding why 8% was used to arrive at the IRR of 18%. I did get 18% but this was done the long way.
    Please assist

    • Profile photo of John Moffat says

      I don’t know what you mean by ‘the long way’- there is only one way of doing it, making two ‘guesses’ and then approximating between them.

      Since we had already been asked to calculate the NPV at 12%, we had one value. You could try any rate of interest for the second value – my answer tried 20%.
      (8% is the difference between 20% and 12%).

  2. avatar says

    This was very helpful thank u but can u work this question for me plz
    An investment has the following inflows and outflows

    Time Cash flow per annum
    0 (20,000)
    1-4 3,000
    5-8 7,000
    10 (10,000)

    What is the net present value of the investment at a discount rate of 8% ?

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