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    Calculation of Internal rate of return (IRR) for Berkshire's investment in GEICO

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    'Using the GEICO dividend Payment history in Exhibit 8 of the case, calculate the IRR on Berkshire's $45.7M investment in GEICO (assuming it was all)in 1976 which grew in value to $1.909 billion by 1994.'

    I'd like a detailed explanation of how to make the calculation with an example using very similar (or preferably the same)figures to those shown in the case

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    Please see the two files attached.

    The Internal Rate of Return (IRR) of a Capital Budgeting project is the discount rate at which the Net Present Value (NPV) of a project equals zero. The IRR decision rule specifies that all independent projects with an IRR greater than the cost of capital should be accepted. When choosing among mutually exclusive ...

    Solution Summary

    The solution provides a good and detailed explanation of the process to calculate and understand the IRR calculations. An Excel file is attached for the answers.