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## For a Mixed Stream or Cash Flows

For a Mixed Stream or Cash Flows  Calculating the IRR for a mixed stream of cash flows is more tedious. In a mixed stream of Cash flows, the inflows in various years are uneven or unequal. One way to simplify the process is to use fake annuity’ as a starting...

## Solutions

Solutions (1) The pay back period is 3.214 (Rs 36,000/Rs 11,200) . . (2) According to Table A-4. discount factors closest to 3.214 for 5 years are 3.274 (16 per Catt rate”b r interest) and 3.199 (17 per cent rate of interest). The actual value of IRR which lies...

## computation

computation  Unlike the NPV method, calculating the value of IRR is more difficult. The procedure will depend on whether the cash flows are annuity or mixed stream. Annuities The following steps are taken in determining IRR for an annuity: • Determine the pay back...

## Accept-Reject Decision

Accept-Reject Decision  The use or the IRR, as a criterion to accept capital investment decisions, involves a comparison of the actual IRR with the required rate of return- also known as the cut-off rate or hurdle rate. TIlt: project would qualify to be accepted if...

## Net” Present Value (NPV) Method

Net” Present Value (NPV) Method  11 K first DCF/I’V technique b the  NPV Allay be described as the summation of the present values of Gish proceeds (CfA i) in each year minus the summation of prudent values of the net cash outflows in each year....