CALCULATING A YIELD
Suppose an investment of $1 million produces no cash flow in the first year but cash flows of $200,000, $300,000, and $900,000 two, three, and four years from now, respectively. What is the return on this investment?
Question 10.EX.10: CALCULATING A YIELD Suppose an investment of $1 million prod...
The IRR for this investment is the interest rate that solves:
\$ 1,000,000=\frac{\$ 200,000}{(1+I R R)^{2}}+\frac{\$ 300,000}{(1+I R R)^{3}}+\frac{\$ 900,000}{(1+I R R)^{4}}
The return is 10.172%.
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