how do you calculate IRR manually?

TiGeR KiNgS

ok so, I need to know ho to calculate IRR manually, not using excell

can some one answer this question


Year 0 Year 1 Year 2 Year 3 Year 4

Project
Red (1,800) 800 700 500 500
Black (1,000) 500 500 360


Using a required rate of return of 10%;

so i would need to see the workings
cheers

attachment is borked

Mikel

1. Your attachment doesn't work.
2. Why are you asking others to do your homework for you?
3. You have the required rate of return, hence you're not looking for the IRR you're looking for the NPV.

Thomas_S_Hunterson

Equate an npv equation to zero and solve for i

TiGeR KiNgS

this inst homework ( you do know its Christmas right) this question could be done in 5 mins if you i knew how to do it

TiGeR KiNgS

Mikel wrote: »

1. Your attachment doesn't work.
2. Why are you asking others to do your homework for you?
3. You have the required rate of return, hence you're not looking for the IRR you're looking for the NPV.

yeah i can find that i just need to know how to find irr


guys can some one help please , im pulling my hair out here

excell gives an answer of 16.2 percent for the first project, but i cant even get close

Do you have to guess another cost of capital percentage?

TiGeR KiNgS

ok i think i figured it out

but the reason i think it is off is because of the rounding /curved line

1st% + (npv1/npv1-npv2)*(1st%-2nd)

(I guessed the second npv value as 11%)

i got 15.8% as the irr used manually can someone confirm if this is the correct way

woodseb

TiGeR KiNgS wrote: »

Do you have to guess another cost of capital percentage?

yes, it's basically trial and error

or you could use google, it's on the internet now

http://www.google.ie/search?sourceid=navclient&ie=UTF-8&rlz=1T4TSHB_enIE271IE271&q=how+to+calculate+IRR+manually

Thomas_S_Hunterson

TiGeR KiNgS wrote: »

ok i think i figured it out

but the reason i think it is off is because of the rounding /curved line

1st% + (npv1/npv1-npv2)*(1st%-2nd)

(I guessed the second npv value as 11%)

i got 15.8% as the irr used manually can someone confirm if this is the correct way

Yea, this is using linear interpolation to estimate the roots. You can apply it recursively to get closer approximations.

TiGeR KiNgS

woodseb wrote: »

yes, it's basically trial and error

or you could use google, it's on the internet now

http://www.google.ie/search?sourceid=navclient&ie=UTF-8&rlz=1T4TSHB_enIE271IE271&q=how+to+calculate+IRR+manually

I tired goggle but kept being directed to using the excell method
but anyway, ( I found the manual formual on Wikipedia)

just to note the reason i couldn't do it was the lecturer used the excell worksheet to calculate so I wasnt able to do it myself.

woodseb

TiGeR KiNgS wrote: »

I tired goggle but kept being directed to using the excell method
but anyway, ( I found the manual formual on Wikipedia)

therein lies your problem:cool:

Hanley

it's all about =IRR(X)