# Calculating IRR and YTM

I am having difficulty finding the correct formula for calculating the yield to maturity and internal rate of return. I am not a finance major and find this very difficult

Could you do problems 6-20 and 6-38 orn give a hint on how to complete?

(See attached file for full problem description)

Here are the cash flows for two mutually exclusive projects:

Project C0 C1 C2 C3

A ($20,000) $8,000 $8,000 $8,000

B ($20,000) 0 0 $25,000

a. At what interest rates would you prefer project A to B?

b. What is the IRR of each project?

Growth Enterprises believes its latest project, which will cost $80,000 to install, will generate a perpetual

growing stream of cash flows. Cash flow at the end of this year will be $5,000 and cash flows in future

years are expected to grow indefinitely at an annual rate of 5 percent.

a. If the discount rate for this project is 10 percent, what is the project NPV?

b. What is the project IRR?

#### Solution Summary

The solution explains how to calculate internal rate of return and yield to maturity