Calculating Internal Rate of Return
8
3UHVV
(QWHU WKH FDVK IORZV XVLQJ
W
3UHVV
:KHQ \RX FDOFXODWH ,55<5 \RX JHW WKH DQQXDO QRPLQDO UDWH WKDW JLYHV
DQ 139 RI ]HUR
7KH IROORZLQJ H[DPSOH XVHV WKH FDVK IORZV WKDW ZHUH HQWHUHG LQ WKH
SUHYLRXV H[DPSOH
0RUH WKDQ RQH ,55<5 FDQ H[LVW ,I \RX JHW WKH
$SSHQGL[ % SDJH
,I WKH VHOOHU RI WKH FRQWUDFW LQ WKH SUHYLRXV H[DPSOH ZDQWV
Example.
DQG \RX DFFHSW WKDW SULFH ZKDW LV \RXU \LHOG" 7KLV LV DQ ,55<5
FDOFXODWLRQ WKDW UHTXLUHV D VOLJKW PRGLILFDWLRQ WR WKH FXUUHQWO\ VWRUHG FDVK
IORZV
5,000
1
3
5
- 8,000
Keys:
&@ 3
DÃ
W
0RUH H[DPSOHV WKDW XVH 139 DQG ,55<5 FDOFXODWLRQV DUH JLYHQ LQ
FKDSWHU ´$GGLWLRQDO ([DPSOHVµ
VWRUH QXPEHU RI SHULRGV SHU \HDU LQ 3<5
D
5,000
7
9
11
IRR/YR = ?
Display:
–28,000.00
12.49
g
DQG
No Solution
7,500
13
15
17
19
Description:
&KDQJHV LQLWLDO FDVK IORZ
&DOFXODWHV DQQXDO
QRPLQDO \LHOG
6: Cash Flow Calculations 83
PHVVDJH VHH
10,000
1
3
5