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irr

This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.

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November 10, 2014 at 4:19 pm #208867
syed ali
Member
- Topics: 92
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a co is an all equity company with a beta of 0.8 it is appraising a one year project which requires an outlay now of $1000 and will generate cash in one year with an expected value of $1250 the project has a beta of 1.3 rf 10% and rm 18@ how irr for project is calculated please help me i didnt find irr
November 11, 2014 at 8:04 am #208978
John Moffat
Keymaster
- Topics: 57
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The IRR is the rate of interest that gives a net present value of zero.
The present value of 1250 in one years time is 1250 / (1+r)
For a NPV of zero, 1250 / (1+r) = 1000
So the IRR = 0.25, or 25%
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