IRR

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

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January 6, 2016 at 10:11 pm #293639
hamzaukadia
Participant
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Hi John,

I just wanted to know if my IRR calculation is correct. (5 years)

I have two NPVs at:

8% = 56.8
20% = 27.5

Therefore

12% = 29.3

1% = 29.3/12 = 2.44
IRR = 8 + (58.8/2.44) = 31.3%
January 7, 2016 at 6:51 am #293652
John Moffat
Keymaster
- Topics: 57
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Yes – your answer is correct.

(Although as you will know from the lectures, any IRR calculated from two guesses will always only be approximate, because the relationship is not linear.)
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