Precision Financial Calculator

Example V-1 Verify IRR

IRR, the Internal Rate of Return, is defined as the discount rate that generates zero net present value. Verify this by giving your own example.

[Solution]

Create yearly cash flows: -1000,300,300,300,300. This gives you IRR=7.71%. Now, type in 7.71 in the Discount Rate box. The NPV and FV at this discount rate become zero.

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