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In the next two years, there will be an investment plan for investing in Y-2 cash...

In the next two years, there will be an investment plan for investing in Y-2 cash flow. In order to uniquely exist between 0 and 1 (or 0% to 100%) of the internal rate of return (IRR), please satisfy (C, Y1, and Y2) conditions that need to be satisfied.

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Answer #1

Internal rate of return or IRR is that rate of return at which NPV from the above investment & cash flows will become zero. IRR is the rate of interest that makes the sum of all cash flows zero, and is useful to compare one investment to another.

How to calculate NPV for a project:

Inorder to calculate IRR of a project NPV should be " 0 "

"r" is the discount rate and

"t" is the total period of the project. (in the current case it is 2 years)

Conditions to be satisfied for the IRR to be between 0-100%

  1. Net cash flows should be positive in both the periods.
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