Beruflich Dokumente
Kultur Dokumente
FIN 321
Erin Kelso & Jen Wroblewski
Thursday, February 1st
What is IRR?
What is IRR?
The discount
rate which sets
the NPV of all
cash flows
equal to 0.
Helps to
determine the
YIELD on an
investment.
Calculating IRR
BA II Plus
Go to the Cash Flow worksheet, plug
in CFo, CF1, and so on
Go to the IRR button and click CPT
(compute) and you will get your IRR!
So now what?
Compute IRR!
A. 15.36%
B. 31.20%
C. -17.29%
D. 26.04%
E. none of the above
In your calculator:
CFo=-200
Enter
C01=50
Enter
F01=2
Enter
C02=100
Enter
F02=2
Enter
C03=125
Enter
F03=1
Enter
IRR
CPT
IRR =
A. 2.61%
B. -9.66%
C. 10.65%
D. -21.79%
E. none of the above
In your calculator:
CFo=-1500
Enter
C01=100
Enter
F01=3
Enter
C02=200
Enter
F02=1
Enter
C03=500
Enter
F03=1
Enter
IRR
CPT
IRR =
Multiple IRRs
NPV
If the cost of
capital is greater
than this
crossover rate,
the two methods
give same answer
If the cost of
capital less than
crossover rate,
two methods give
separate answers
Crossover rate
Cost of capital
NPVA
NPVB
Any
Questions?
Sources
http://en.wikipedia.org/wiki/Internal_rate_of_return