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How can we calculate IRR of project? please give an example and solve it with typing the formula&...

how can we calculate IRR of project? please give an example and solve it with typing the formula  

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Answer #1

IRR can be calculated by taking the rate at which NPV = 0. Both IRR and NPV formula are similar.
Example
A Project takes an initial investment of 1000 the cash flows for 2 years are 1500 and 2000

Formula NPV = 0 = -CF0 + CF1/(1+IRR) + CF2/(1+IRR)2
0 = -1000 + 1500/(1+IRR) + 2000/(1+IRR)2

By using hit and trial we get IRR = 135.08%

Please Discuss in case of Doubt

Best of Luck. God Bless
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