Money-Weighted Rate of Return - IRR

[FrankCFA]

Reading #32 Kaplan p66.
Solving any IRR equation is a trial and error process of gueesing a reutrn and solving for ending value ….
Sorry I forget what’s the limitation of using calcuator to solve IRR…I think under certain circumstance we can use calculator? Thanks.

 

[S2000magician]

Their point is that the calculator uses a trial-and-error process. It’s a sophisticated T&E, to be sure, but a T&E nonetheless.

 

[Viceroy]

Well it’s like in excel when you are discounting cash flows.
You can use the IRR function or you can find the discount rate that solves for NPV = 0 yourself through a trial and error process.
The IRR function (on excel or on a calculator) does nothing more than doing the itirations for you.

 

[S2000magician]

Viceroy wrote:Well it’s like in excel when you are discounting cash flows.
You can use the IRR function or you can find the discount rate that solves for NPV = 0 yourself through a trial and error process.

Or you can use Goal Seek, or Solver.