I am not sure of the best way to go about this problem. Maybe finding the NPV an

Question

I am not sure of the best way to go about this problem. Maybe finding the NPV and then solving for r? Thanks in advance!

"Jupiter’s is considering an investment in time and administrative expense on an effort that promises one large payoff in the future, followed by additional expenses over a 10-year horizon. The cash flow profile is shown in the table below. Jupiter’s MARR is 12%/year."

upiter's is considering an investment in time and administrative expense on an effort that promises one large payoff in the future, followed by additional expenses over a 10- year horizon. The cash flow profile is shown in the table below. Jupiter's MARR is 12%/year EOY Cash Flow (KS) $2 $10 $12 $14 $16 $18 $200 $10 $12 $14 -$100 10 Click here to access the TVM Factor Table Calculator What are the internal rates of return of this investment? IRR 1 IRR 2 Enter the smaller value first. Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.2

Explanation / Answer

IRR @ 21.6818%

Take the given cash flow once with opposite sign and now type irr in excel, and in the syntax use all these values and you will get irr as 21.6818 you can use this value as discount factor you will get zero npv as desired.

Orignal 15% IRR values with discount rate.

Year Cash flow

IRR @ 21.6818%

Inflows IRR MARR @ 12% Inflows MARR 0 $              (2.00) $         1.0000 $      (2.0000) $          1.0000 $        (2.0000) 1 $            (10.00) $         0.8218 $      (8.2182) $          0.8929 $        (8.9286) 2 $            (12.00) $         0.6754 $      (8.1046) $          0.7972 $        (9.5663) 3 $            (14.00) $         0.5550 $      (7.7705) $          0.7118 $        (9.9649) 4 $            (16.00) $         0.4561 $      (7.2982) $          0.6355 $      (10.1683) 5 $            (18.00) $         0.3749 $      (6.7475) $          0.5674 $      (10.2137) 6 $            200.00 $         0.3081 $      61.6136 $          0.5066 $      101.3262 7 $            (10.00) $         0.2532 $      (2.5318) $          0.4523 $        (4.5235) 8 $            (12.00) $         0.2081 $      (2.4968) $          0.4039 $        (4.8466) 9 $            (14.00) $         0.1710 $      (2.3939) $          0.3606 $        (5.0485) 10 $          (100.00) $         0.1405 $    (14.0522) $          0.3220 $      (32.1973) $             0.00 $               3.87 12% $               2.00 $            10.00 $            12.00 $            14.00 21.6818% $            16.00 $            18.00 $        (200.00) $            10.00 $            12.00 $            14.00 $          100.00

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