1. PROBLEM
2. IRR CALCULATION
3.
4. Determine the IRR on the following projects: a. An initial outlay of $10,000 resulting in a single free cash flow of $17,182 after 8 years. b. An initial outlay of $10,000 resulting in a single free cash flow of $48,077 after 10 years. c. An initial outlay of $10,000 resulting in a single free cash flow of $114,943 after 20 years. d. An initial outlay of $10,000 resulting in a single free cash flow of $13,680 after 3 years.
5. Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy/paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function is to be used, the directions will specify the use of that function. Do not type in numerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest appearance of the data in your formulas, usually the Given Data section.
6. SOLUTION
7. a. An initial outlay of $10,000 resulting in a single free cash flow of $17,182 after 8 years.
8. Initial outlay	$10,000
9. Future value	$17,182
10. Years	8
11. IRR	_______
12.
13. b. An initial outlay of $10,000 resulting in a single free cash flow of $48,077 after 10 years.
14. Initial outlay	$10,000
15. Future value	$48,077
16. Years	10
17. IRR	________
18.
19. c. An initial outlay of $10,000 resulting in a single free cash flow of $114,943 after 20 years.
20. Initial outlay	$10,000
21. Future value	$114,943
22. Years	20
23. IRR	_________
24.
25. d. An initial outlay of $10,000 resulting in a single free cash flow of $13,680 after 3 years.
26. Initial outlay	$10,000
27. Future value	$13,680
28. Years	3
29. IRR	_________
30.
31. Requirements:
1. Start Excel. Download and open the workbook named: Keown_Martin_Petty_Problem_10-2_Start. Important note: All calculations must be shown using cell references. Do NOT enter absolute numbers in the cells.
2. In cell B11, use the function RATE to calculate the IRR for the data in part (a). Note: Enter 0.1 for Guess argument of the function RATE. (1 point)
3. To calculate the IRR for the data in parts (b) through (d), copy cell B11 and paste onto cells B17, B23, and B29. Note: Enter 0.1 for Guess argument of the function RATE. (3 points)