IRR

While calculating irr how to identify guess rates easily?

Answers (4)

1- Look at PV factors given in question. 2- Find out average cashflow for the given period. Divide the total investment by average cashflow. You will get an approximate present value annuity factor. Take rate corresponding to that.

Thanks sir, but what if PV factors are not given question?

Thanks sir, but what if PV factors are not given question?

IRRs asked for problems in exams are usually in range of 8-15% for data where period is 4-5 years and sum of inflow ( without PV ) is 120-150% of outflow. Start with either 8% or 15% and you will be able to move in right direction in your next guess