alleryStart learning →How is the IRR equation generally solved?
ABy taking the average of cash flows
BBy a closed-form algebraic formula
CBy numerical iteration or graphs
DBy dividing profit by the outlay
Answer & Solution
Correct answer: C. By numerical iteration or graphs
The IRR is a root of a polynomial in the discount rate that has no general formula, so iteration is used.
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Related questions
The same return received later gives an IRR that is:If cash flows are random variables, as in a life annuity, IRR uses their:The AIRR approach of Magni was introduced to solve problems of:In personal finance the IRR measures what type of performance?With no capital constraint, which projects does a firm accept to maximize value?Mutually exclusive projects are those from which:The equivalent annuity method divides the NPV by what to annualize it?The equivalent annuity method is often used to compare projects of: