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Internal rate of return

The expected cash flows are as follows

year Cash Flow
0 - $315,000.00
1 + $71,000.00
2 + $150,000.00
3 + $150,000.00

What is the project's internal rate of return and the NPV on the following discount rates?

If I hand plotted a chart where the discount rate is on the x axis and the net present value on the y axis and plotted the NPV of the project as a function of the discount rate by dots for the 4 discount rates the curve will intersect the horizontal line at a particular discount rate. What is the discount rate at which the graph intersects the horizontal axis?

Solution Preview

Project's IRR can be calculated through Excel. Remember the manual way to get IRR is very tedious and is a trial and error process. However, Excel is very good at calculating IRR quickly.

To get ...

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The solution answers the question below in great detail.