Homework SourseWhat is the IRR of the following set of cash flows Year Cash
What is the IRR of the following set of cash flows? Year Cash Flow 0 –$8,736 1 5,500 2 3,500 3 4,500
Solution
IRR is the rate at which NPV is 0.
At 26.68% NPV is near 0.
| Particulars | Year 0 | Year 1 | Year 2 | Year 3 | Total |
| Cash flow | -8736 | 5500 | 3500 | 4500 | |
| Discount factor | 1 | 0.789391 | 0.623138 | 0.491899 | |
| Present value | -8,736.00 | 4,341.65 | 2,180.98 | 2,213.54 | 0.17 |
