Asked Jul 16, 2019


What is the definition of internal rate of return (IRR) (it is efficient to write down the formula)? What are the given information and what is the unknown variable?



Expert Answer

Step 1

The internal rate of return (IRR) is a form of capital budgeting that finds the profits received from investments. This is a discount rate that converts net present value in the specific project to zero in respective cash flows. It plans for expansion and growth.

Step 2

The formula for calculating &n...


Image Transcriptionclose

Net cash flow + year 0 Net cash floW Yaar 2 + Net cash flow Year 1 Year n 0 Net cash flow (1+IRR (1+IRR) (1+IRR


Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in



Related Economics Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: Let’s apply the general equilibrium set up to discuss the on-going trade war between the U.S. and Ch...

A: General equilibrium (GE) theory mainly focuses on determining the behavior of demand (D), supply (S)...


Q: explain what would happen to the ecomony if velocity is reduced sigificantly.   explain why FED chai...

A: Since we are entitled to answer one question per request, we would be answering the 1st question. If...


Q: Lou’s preferences over pizza (x) and other goods (y) are given by U(x, y) = 2xy2. His income is $200...

A: Since we are entitled to answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the que...


Q: Transmission and Amplification Mechanisms-Ask FRED ALFREDi -capacity utilization: Total Industry Vin...

A: b.Transmission and amplification mechanism:From the given graph, the approximate capacity utilizatio...


Q: in International trade about tariff: using a simple Swiss formula to calculate the final tariff: ini...

A: The Swiss formula for calculating final tariff rate is given below.


Q: Part 1 and Part II are independent. Please answer both parts. Part I: You are advising company ABC o...

A: To answer this question we need to evaluate present value of payments in  both the cases.The present...


Q: a1. You learn on the business channel that inflation was about 0.8% last month.  Assume this rate is...

A: Since you have not mentioned which question have to answer. So, I am answering question “a1”.


Q: If the reserve ratio requirement in the banking system is 7 percent, what is the money multiplier? A...

A: Money multiplier:Money multiplier can be calculated as follows:


Q: You are a profit-maximizing firm. Suppose there are two types of customers (50% of 1 type, 50% of th...

A: We are given:Price for coat and a pair of pants for consumers of type RPrice for coat = $80Price of ...