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

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See the attached file.

'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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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.

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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 ...

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