I have quite some problems with calculating the IRR:
What I have calculated so far for Project A:
0=-20'000+8'000/(1+IRR)+7'000/((1+IRR)^2)+6'000/((1+IRR)^3) (multiply everything with ((1+IRR)^3)
0=-20'000*((1+IRR)^3)+8'000*((1+IRR)^2)+6'000 (divide through -1'000)
0=20*((1+IRR)^3)+8*((1+IRR)^2)+6 (calculate so no brackets)
0=20*(1+IRR)*(1+IRR)*(1+IRR)+8*(1+IRR)(1+IRR)+6
0=20*(x^3+3x^2+3x+1)*8*(x^2+2x+1)+6
and now, how do I get IRR (=x)???
Would really appreciate if sbdy could help mer
Project | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
A | -20'000 | 8'000 | 7'000 | 6'000 | 0 | 0 | 0 |
B | -20'000 | 3'500 | 3'500 | 3'500 | 3'500 | 3'500 | 3'500 |
C | - | -10'000 | 2'500 | 2'500 | 2'500 | 2'500 | 2'500 |
What I have calculated so far for Project A:
0=-20'000+8'000/(1+IRR)+7'000/((1+IRR)^2)+6'000/((1+IRR)^3) (multiply everything with ((1+IRR)^3)
0=-20'000*((1+IRR)^3)+8'000*((1+IRR)^2)+6'000 (divide through -1'000)
0=20*((1+IRR)^3)+8*((1+IRR)^2)+6 (calculate so no brackets)
0=20*(1+IRR)*(1+IRR)*(1+IRR)+8*(1+IRR)(1+IRR)+6
0=20*(x^3+3x^2+3x+1)*8*(x^2+2x+1)+6
and now, how do I get IRR (=x)???
Would really appreciate if sbdy could help mer