Page 406 - F2 Integrated Workbook STUDENT 2019
P. 406
Chapter 19
Example 2.9
Answer = 10.25%
Cash Flows
Year 0 $97.00
Year 1 – 4 $8
Year 4 $105.00
Discounting
Year Cash flow Disc factor Present Disc factor Present
@ 5% value @ 12% value
0 (97.00) 1 (97.00) 1 (97.00)
1 – 4 8 3.546 28.37 3.037 24.30
3 105 0.823 86.42 0.636 66.78
Total +17.79 –5.92
Yield to maturity
17.79
IRR = 5% + × (12% – 5%) = 10.25%
(17.79 + 5.92)
398
