Which of the following cash flow streams does NOT have an IR

Which of the following cash flow streams does NOT have an IRR?

Solution

First cash flow stream does not have an IRR as it has only cash out flow without any inflow in the entire project life. There is no return and hence no rate of return. We can check it with excel as:

(i)

(ii)

(iii)

(iv)

(100)

(100)

(100)

100

(40)

40

40

40

(60)

60

80

60

(80)

80

(10)

(300)

IRR

#NUM!

31.69%

6.37%

19.59%

Excel formula for IRR is “=IRR(Cell no: Cell no)

Hence option 1^st “- 100, - 40, -60, - 80” is correct answer.