Let’s say I’m given a series of cash flows and given an NPV. If I’m asked to give the IRR, then the NPV has nothing to do with that right? series of cash flows -100 100 50 30 NPV is given as 54.7708. Through backward induction, I figure out the IRR is 10%. However, if I just calculate the IRR for the project without the given NPV, the IRR is 47.6323 What’s the correct IRR?
Homie, use your BAII + for these dude. Straight up this should be a 20 second question. CFo = -100 CF1 = 100 CF2 = 50 CF3 = 30 IRR = 47.6323 Dont bother with backward induction.
The NPV is given just to confuse you.
IRR is when the NPV = 0…and yes just a simple calculator question, except there are unconventional cash flows…then you need to be aware of possible MULTIPLE IRR’S…in which the calculator doesn’t show (atleast that I’m aware of) You better make sure you understand this section…I’m sure there will be some theory in NPV, IRR, payback period et cetera…NPV profile is a good thing to fully understand as well… make sure to go through the advantages/disadvantages of NPV vs IRR for mutually exclusive and independent projects… GOOD LUCK EVERYONE
NPV given to trip you up