Purchase Solution

IRR

Not what you're looking for?

Ask Custom Question

The following informtion applies, can this be solved using excel?
Equity shares outstanding - 20 million
Stock price per share - 10
Yield to maturity debt - 12
Book value of interest-bearing debt - 180 million
Coupon interest rate on debt - 7%
Market value debt - 200 million
Book value of equity 100 million
Cost of Equity Capital - 15%
Tax rate - 40%

The company is an average-risk investment costing $45 million and has an annual after tax cash flow of $5 million perpetuity. Find the IRR?

Purchase this Solution
Solution Summary

The solution explains how to calculate the IRR of an investment.

Solution Preview

The details given in the question are not required. You have to find the IRR. IRR is the discounting rate that will make the present value of the inflows equal ...

Purchase this Solution
Free BrainMass Quizzes
Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

View More Free Quizzes
Related BrainMass Solutions

  • IRR Rate - The budget committee has received the following

    20,000 + 30,000 = 0 (1+IRR)1 (1+IRR)2 (1+IRR)3 (1+IRR)4 (1+IRR)5 IRR = 12.48% Calculating for IRR is a trial and error procedure.

  • IRR and MIRR

    NPV = -52,125 + 12,000 + 12,000 + 12,000 + 12,000 + 12,000 + 12,000 + 12,000 (1+IRR)1 (1+IRR)2 (1+IRR)3 (1+IRR)4 (1+IRR)5 (1+IRR)6 (1+IRR)7 + 12,000 = 0 (1+IRR)8 IRR = 16% Calculating for IRR is a trial

  • IRR

    NPV = -5,000,000 + 1,800,000 + 1,900,000 + 1,700,000 + 1,300,000 = 0 (1+IRR)1 (1+IRR)2 (1+IRR)3 (1+IRR)4 IRR = 13.57% Calculating for IRR is a trial and error procedure.

  • NPV over IRR

    NPV is better than IRR because IRR suffers from a few shortcomings: 1. IRR is relative. In general a 30% IRR is better than a 10% IRR. However, the 10% IRR project can have a higher NPV than a 30% IRR project.

  • Calculating the IRR Value

    NPV = -1,000 + 450 + 450 + 450 = 0 (1+IRR)^1 (1+IRR)^2 (1+IRR)^3 Calculating for IRR is a trial and error procedure.

  • Cash Flow Data - IRR

    NPV = -1,000 + 450 + 450 + 450 = 0 (1+IRR)1 (1+IRR)2 (1+IRR)3 IRR = 16.648% Calculating for IRR is a trial and error procedure.

  • Capital Budgeting Models

    IRR can be found by using IRR function in MS Excel. IRR (Project A1)=23.56% =IRR(B4:B6) IRR (Project A2)=22.22% =IRR(C4:C6) Both projects have higher value of IRR than MARR of 15%. Both can be selected.

  • ABC Widgets

    (1 + IRR)1 (1 + IRR)2 (1 + IRR)3 (1 + IRR)4 Calculating for IRR is a trial and error procedure.

  • IRR and MIRR Calculations

    NPV = -52,125 + 12,000 + 12,000 + 12,000 + 12,000 + 12,000 + 12,000 + 12,000 (1+IRR)1 (1+IRR)2 (1+IRR)3 (1+IRR)4 (1+IRR)5 (1+IRR)6 (1+IRR)7 + 12,000 = 0 (1+IRR)8 IRR = 16% Calculating for IRR is a trial

  • IRR method and NPV method

    IRR Internal rate of return refers to the return earned from the project. At IRR, NPV= zero. Pick the project having highest IRR.

View More Related Solutions