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Up0
Can someone tell me what buttons to push on my calculator in order to solve this IRR equation because I think I am doing it the long way not utilizing the actual IRR button?
The Japanese company Kageyama Ltd. is considering whether or not to open a new factory to manufacture capacitors used in cell phones. The factory will require an investment of ¥1,000 million. The factory is expected to generate level cash flows of ¥294.8 million per year in each of the next five years. According to information in its financial reports, Kageyama’s opportunity cost of capital for this type of project is 11 percent. 1.Determine whether the project will benefit Kageyama’s shareholders using the NPV rule. 2.Determine whether the project will benefit Kageyama’s shareholders using the IRR rule.NPV=−1,000+294.8[1−(1.11) −5 ]/0.11 NPV=−1,000+1,089.55=89.55Because the project’s NPV is positive ¥89.55 million, it should benefit Kageyama’s shareholders.Solution to 2:The IRR of the project is the solution toNPV=−1,000+294.8[1−(1+IRR) −5 ] / IRR=0 -
Up3
Hey @KBaltazar‌ the category “CFA Practice Questions” is specifically for polls set up as CFA questions for forum members to answer. For future questions like this please categorise either in CFA General, or its respective CFA Level. Thanks!
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Up2
@KBaltazar‌
Please refer to the Passed Tense complete BA II Plus calculator guide at:
https://www.youtube.com/watch?v=Ehchb6Zvag0&list=UU8DNfSlObTQsdz0rOWB2-0A -
Up1
On the TI, you should input the respective cash flows and their frequencies if they’re recurring. Click the NPV button, put in the cost of capital, then move down one and press CPT for the answer. It also calculates the payback duration, and the discounted payback duration. If the cash flows don’t vary, you can solve NPV problems like a regular annuity.
For IRR, it’s simply clicking the IRR button after inputting the relevant flows.
Goodluck, and double check with what I wrote because I could be wrong.
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