Question

Calculate the Internal Rate of Return for the following cash flow.

Year	Cash Flow
0	-100
1	20
2	50
3	80

Option A: 16.98%

Option B: 19.88%

Option C: 18.79%

Option D: 15.32%

Answer 1

Answer is 18.79%

Cash Flows:
Year 0 = -100
Year 1 = 20
Year 2 = 50
Year 3 = 80

Let IRR be i%

NPV = -100 + 20/(1+i) + 50/(1+i)^2 + 80/(1+i)^3
0 = -100 + 20/(1+i) + 50/(1+i)^2 + 80/(1+i)^3

Using financial calculator, i = 18.79%

IRR of these cash flows is 18.79%