IRR.ppt - Internal Rate of Return(IRR Finding IRR is no...

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Internal Rate of Return (IRR) Internal Rate of Return (IRR) Finding IRR is no more difficult now . . .
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What is IRR ? What is IRR ? The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first. IRR is sometimes referred to as “Economic Rate of Return (ERR)".
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FINDING IRR FINDING IRR (Trial & Error Method with Interpolation Formula) (Trial & Error Method with Interpolation Formula) A project involves an initial outlay of Rs. 240,000. The estimated net cash flows for the project are as given: The company’s required rate of return is 13 percent .
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