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( MGT201 )
At 15 % discount rate:
NPV = - 240,000+[140,000/(1.15)]+[80,000/(1.15)2]+[60,000/(1.15)3]+[20,000/(1.15)4]+[20,000/(1.15)5]
= - 240,000 + 243,059
= Rs. 3,059
At 17 % discount rate:
Prepared
NPV = - 240,000+[140,000/(1.17)]+[80,000/(1.17)2]+[60,000/(1.17)3]+[20,000/(1.17)4]+[20,000/(1.17)5]
~ by ~
= - 240,000 + 119,658 + 58,441 + 37,463 + 10,673 + 9,122
Instructor
= - 240,000 + 235,357
MGT201
= Rs. – 4,643
Rate NPV
0.15 Rs.3,059
X Rs.3,059
0.02 IRR 0 Rs.7,702
0.17 -Rs.4,643
Prepared
~ by ~
Instructor
X Rs.3,059
=
MGT201
.02 Rs.7,702
Interpolation Technique
(For Finding IRR)
X
Prepared
~ by ~ IRR = Lower Rate + X
Instructor
IRR = 0.15 + 0.0079
MGT201
IRR = 0.1579 or 15.79%
Virtual University of Pakistan
Prepared
OR
~ by ~
Instructor
MGT201
NPV = -240,000+[140,000/(1.1579)]+[80,000/(1.1579)2]
+[60,000/(1.1579)3]+[20,000/(1.1579)4]+[20,000/(1.1579)5]
= - 240,000 + 239,962
It is hoped that…..
You’d be now able to find out IRR easily.
. . . GOOD LUCK . . .
Prepared
~ by ~
Instructor
Instructor MGT201
MGT201
Virtual University of Pakistan