b) What alternative rate of return would you calculate and explain with...

J

James Bell

New member
...your own words how to calculate the re? The engineering department needs to analyze a project with the following non-normal cash flows and your manager asks you to provide them with internal rate of return (IRR).
Year 0 Year 1 Year 2
-$1,600+$10,000 -$10,000
a)What would your response be to your manager? (Problems that arise with IRR if one faces non-normal cash flows).
b)What alternative rate of return would you calculate and explain with your own words how to calculate the return?
 
a) To cal IRR, means NPV will be zero. In your case, wat is your discount rate??? without discount rate it is impossible to cal IRR.

b) both NPV n IRR are best to evaluate whether to accept or reject the project (initially without much additional info) becuz it is easy to understand & calculate
 
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