In July of 2012, Taylor purchased 2,000 shares of XYZ common stock for $75,000. He then...
In July of 2012, Taylor purchased 2,000 shares of XYZ common stock for $75,000. He then sold 1,000 shares of XYZ in July of 2013 for $39 per share. The remaining 1,000 shares were finally sold for $47 per share in July 2014. Assuming a MARR of 15%. What was Taylor’s internal rate of return (IRR) on this investment (using the IRR function in Excel for your calculation)?
Please only fill in the number of your calculated result in the blank, e.g., if the result is 7.537%, fill in “7.54”; also keep 2 digits after the decimal point.
Homework Answers
Year 0 is July of 2012, Year 1 is July of 2013 and Year 2 is is July of 2014.
IRR is the internal rate of return at which present value of cash flows is equal to initial investment.
initial investment is $75,000. it is a cash outflow that's why it is negative.
| Year | Cash flow |
| 0 | -$75,000 |
| 1 | $39,000 |
| 2 | $47,000 |
| IRR | 9.32% |
Formulas
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