5. In this exercise we solve iteratively for the internal rate of return. Consider an investment that costs 800 and has cash flows of 300, 200, 150, 122, 133 in years 1–5 (see cells A8:B13 in the following spreadsheet).

Setting up the loan table shows that 10 percent is greater than the IRR (because the return of principal at the end of year 5 is less than the principal at the beginning of the year).

Setting the IRR? cell equal to 3 percent shows that 3 percent is less than the IRR, since the return of principal at the end of year 5 is greater than the principal at the beginning of year 5.
By changing the IRR? cell, find the internal rate of return of the investment.