Page 29 - FINAL CFA SLIDES JUNE 2019 DAY 2

LOS 7.a: Calculate and interpret the
net present value (NPV) and the Session Unit 2: Discounted Cash Flow Applications
internal rate of return (IRR) of an investment.

Example: Computing IRR: What is the IRR for the investment described in the preceding example?

Answer: Substituting the investment’s cash flows into the previous IRR equation results in the following equation:

Solving this equation yields an IRR = 15.52% (Trial and error method too is applicable): Alternatively on TI