Question

What is the IRR for the following set of cash flows Year Cash Flow 0:- 5000 1:900 2:2700 3:3900 4:1800 A 23 26.78 D 22

Answer 1

Answer is 26.78%

Cash Flows:
Year 0 = -5,000
Year 1 = 900
Year 2 = 2,700
Year 3 = 3,900
Year 4 = 1,800

Let IRR be i%

NPV = -5,000 + 900/(1+i) + 2,700/(1+i)^2 + 3,900/(1+i)^3 + 1,800/(1+i)^4
0 = -5,000 + 900/(1+i) + 2,700/(1+i)^2 + 3,900/(1+i)^3 + 1,800/(1+i)^4

Using financial calculator, i = 26.78%

IRR of the following set of cash flows is 26.78%