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I posted this on /adv/ but I'm hoping you guys will have the answer
I have an accounting exam tomorrow and I cannot wrap my head around IRR. The internet tells me one thing, my fucking stupid lecturer tells me another
Now I do not have the slightest clue as to how to work this out, some help would be great:
In a calculation of the internal rate of return (IRR) of a project it is found that the net present value is +£140m at 20% discount rate and -£84m at 22% discount rate. What is the IRR?
a) 20.38%
b) 20.63%
c) 20.75%
d) 21.25%
what is the formula to solve this?? clueless right here
Also, is there anyway to quickly get to the IRR? I really don't think calculating the NPV for different discount rates through trial and error is the most efficient way. We're only allowed a standard casio scientific calculator too, so no financial calculator
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Disclaimer: I'm only a MathsFag and have not a fucking clue about finance or what IRR is.
Now, assuming we're looking for a value between 20% and 22% discount rate to give £0, I did:
(£140/(£140--£84) * 2% + 20% = 21.25%.
It's simple rations, senpai....
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>>1062046
thank you man, sometimes it's simple calculations like that that does it, think I've just overcomplicated it for myself
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