How to count IRR? "benjamin designs has prepare the following estimates for a..."

[nicolejwliew]

How to count IRR? "benjamin designs has prepare the following estimates for a..."

benjamin designs has prepare the following estimates for a longterm project it is considering. The initila investment is RM18,250, and the project is expected to yield after tax cash inflow of RM4000per year for 7 years. The firm has 10% cost of capital.

a) DEtermine the net present value (NPV) for the project
b) DEtermine the internal rate of return (IRR) for the project
c) Would you recommended that the firm accept or reject the project ? Explain your answer.

Answer : a) -1222

it is right for question a
and i dont know how to count the IRR although i have the formula but i still getting blur.

 

[Deleted member 4993]

benjamin designs has prepare the following estimates for a longterm project it is considering. The initila investment is RM18,250, and the project is expected to yield after tax cash inflow of RM4000per year for 7 years. The firm has 10% cost of capital.

a) DEtermine the net present value (NPV) for the project
b) DEtermine the internal rate of return (IRR) for the project
c) Would you recommended that the firm accept or reject the project ? Explain your answer.

Answer : a) -1222

it is right for question a
and i dont know how to count the IRR although i have the formula but i still getting blur.

What did you do about the problem you posted in:

http://www.freemathhelp.com/forum/t...ccumulate-funds-to-provide-a-retirement-annui

 

[Ishuda]

benjamin designs has prepare the following estimates for a longterm project it is considering. The initila investment is RM18,250, and the project is expected to yield after tax cash inflow of RM4000per year for 7 years. The firm has 10% cost of capital.

a) DEtermine the net present value (NPV) for the project
b) DEtermine the internal rate of return (IRR) for the project
c) Would you recommended that the firm accept or reject the project ? Explain your answer.

Answer : a) -1222

it is right for question a
and i dont know how to count the IRR although i have the formula but i still getting blur.

(a) I agree with Denis. I think you just have your signs reversed.
(b) One very easy method, though tedious unless you can automate it, is use a 'halving method'. Since the present value(PV) is positive, you know the IRR is more than 10%. So 'guess' 15% and work out the present value.
-PV will be negative so you know the IRR is between 10% and 15%. Take the midpoint, (10+15)/2=12.5%, and compute.
-PV is negative, so use (10+12.5)/2=11.25%.
-PV is positive, so use (11.25+12.5)=11.875%.
-PV is positive, so use ...

Other methods are much faster.