Chapter 5 prob 11 b corporate finance by brealey

how to get the IRR on this question why is the formula used for IRR (B4:B7)? is it a %ratio?

9:11 LTE chegg.com b. From the graph presented in part a, the approximate IRR of each project could be determined, for Project A 13.1% and for Project B 11,9% Calculate the approximate IRR of each project The IRR (Internal Rate of Return) is the rate of return the project will produce over its lite. At the IRR, the NPV (Net Present Value) of the project will be equal to V". The IRR is presented in percentage. Therefore, it is easy to understand that at what percentage the investment will yield The project with the highest IRR considered the best. This is because it will give the highest return to the investors. Compute the IRR of the projects using the IRR function of spreadsheet. Enter values and formulas in the spreadsheet as shown in the image below B C TA A B C 10 1-100 11 0 140 BU-BULBST BRICCI The obtained result is provided below 1 Yow Cadet Progest A Part 18 A D c -100 1 . se . 0 TRR 11 Thus, the IRR for project A and Project Bare Sad respectively Comment Circumstances that should support the acceptance of Project A The IRR of the Project A is higher, and it will return more than the initial investment in only 2 years. Thus, firm will be able to realize its investment from Project A in period lesser than Project B. Also, the company should accept the Project Aif the discount rate is greater than 10.7% (IRR of incremental investment) and lesser than KURRON Proiect AL