I saw your answers for somebody else's homework and I was wondering if you could explain me how to calculate (no excel please) the IRR and provide an explanation. I have a financial calculator, but maybe if there is a certain formula or steps, you could give me some guidance. The question is #6. I am working on the same exact exercise, but I am concerned about understanding the concept and the calculation, rather than just the answer. The professor said something that the IRR is found by "trial and error" - I really don't understand what I am supposed to do. Please help me because I am very weak in Finance. Thank you.

1) Find the future value of $500, invested at 6% annual interest, compounded monthly, for three years? Answer: A= P(1+(r))^(nt) FV = $598.34 Alternate method: FV = 2) 3) $598.34 Find the present value of $374, paid exactly nine years from now, if the required rate of return is 9%. Answer: PV = $172.20 You're saving for your daughter's college expenses. She's now seven years of age, and you assume she college at age eighteen. You figure that the total for four years of college will be $150,000. If you can e interest on a college savings account, how much will you need to put in the account now to have $150,0 daughter starts college? Answer: N= 11 Years FV = $150,000 PV = $120,639.46 4) If the present discounted value of $139 received a year from today is $125, what is the discount rate? Answer: Discount Rate = 11.20% 5) A factory costs $800,000. You reckon that it will produce an inflow after operating costs of $170,000 a opportunity cost of capital is 14%, what is the net present value (NPV) of the factory? Answer: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 -$800,000 $170,000 $170,000 $170,000 $170,000 $170,000 $170,000 $170,000 $170,000 $170,000 $170,000 Cost of Capital = NPV = 6) 14% $86,739.66 After graduation from Harvard, you decide to stay in the Cambridge area and start your own business. Y Knowing first-hand the pressure Harvard students are under, you consider opening a business that allow paintball center right in The Square. The cost of the project would be $150,000, payable up front, while revenues are expected to be $7,500 p a) If the interest rate on comparable assets is 4%, is this project worthwhile? Show your calculations. Rate = 4% Revenue forever = $7,500 Total Cash inflow = $187,500 NPV = $37,500 Yes, this project is worthwhile to accept as the NPV is positive. b) What is the project's internal rate of return (IRR)? Show your calculations Rate = 4% Revenue forever = $7,500 Total Cash inflow = $150,000 NPV = $0 IRR = 5.00% Alternative way to solve this: NPV @ 4.5% $16,666.67 NPV @ 5% $0.00 Therefore, the IRR is 5% as in NPV is $0 at 5%. You are also considering a second business opportunity: Supplying fish, fresh from the bottom of the C front payment from them of $15,000. You figure it will cost you $5,000 a year in supplies to provide th So, the revenue and costs of the project can be summarized as follows: Immediate and only revenue: $15,000 Costs in Year 1: $5,000 Costs in Year 2: $5,000 Costs in Year 3: $5,000 c) Find this project's internal rate of return (IRR). Show your calculations. Year 0 ($15,000) Year1 $10,000 (Revenue - Cost) Year2 $10,000 Year3 $10,000 IRR = 45% monthly, for three years? quired rate of return is 9%. s of age, and you assume she'll start will be $150,000. If you can earn 2% e account now to have $150,000 when your , what is the discount rate? operating costs of $170,000 a year for 10 years. If the he factory? $149,123 $130,809 $114,745 $100,654 $88,293 $77,450 $67,938 $59,595 $86,740 $52,276 $45,856 $886,740 nd start your own business. You think you see a couple of opportunities. opening a business that allows them to let off steam and get rid of their aggression: A es are expected to be $7,500 per year, forever. Show your calculations. For goal seek click on the data tab on the top, click the whatif option and choose Goal seek. This is run through goal seeker. esh from the bottom of the Charles River, to Harvard Dining Services, for the next three years in return for an upyear in supplies to provide this culinary joy. a tab on the top, click the whathoose Goal seek. in return for an up