Homework SourseThe cutting edge product of Continental Fan had the followin
The cutting edge product of Continental Fan had the following net cash flow series during its first 5-year period on the market. Find all rate of return values between 0% and 100%
The rate of return is _______%
| Year | Net Cash Flow, $ |
| 0 | -56,000 |
| 1 | 39,000 |
| 2 | 28,000 |
| 3 | 15,000 |
| 4 | -5,000 |
| 5 | 10,000 |
Solution
We need to find IRR at which Present worth of Net Cash Flow equals to Initial Cash flow
-56000=39000/(1+irr)+28000/(1+irr)^2+15000/(1+irr)^3-5000/(1+irr)^4+10000/(1+irr)^5
Using trial and error method (Interpolation)
irr=27.67%
