WOULD YOU PLEASE SHOW EXACTLY HOW TO GET THE INTERNAL RATE OF RETURN if you can

Question

WOULD YOU PLEASE SHOW EXACTLY HOW TO GET THE INTERNAL RATE OF RETURN if you can please show how to do it on Excel too. THANK YOU

Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $60,000. The annual cash inflows for the next three years will be:

Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method.

Determine the internal rate of return. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $60,000. The annual cash inflows for the next three years will be:

Explanation / Answer

1.Calculation of NPV at discount rate 15%:

Calculation of NPV at discount rate 20%:

So that Internal rate of return must be between these two discount rates.

Calculation of internal rate of return by using formula :

                                                 = 15%+ 62379 - 60000/62379 - 57752 *5%

                                                 = 15% + 2379/4627 *5%

                                                 = 15%+2.57%

                                                 = 17.57%

Year Cash flow Pv factor@15% Present value 0 (60000) 1 (60000) 1 30000 0.8695 26085 2 28000 0.7561 21171 3 23000 0.6575 15123 Net present value $2379

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