首页 | 学习中心 | 注册 登录
返回列表 发帖
burnsy562000

Rank: 2

UID
223319 
帖子
202 
主题
100 
注册时间
2011-7-11 
最后登录
2016-4-15 
1# 跳转到 » 倒序看帖
打印
tT
发表于 2013-4-2 12:28 | 只看该作者

is this question right ???

following, question, multiple, correct
Which of the following cash flow streams is most likely to have multiple IRRs?
Purchase Price Cash Flow 1 Cash Flow 2
A) $1.0 million $1.0 million gain $0.1 million expense
B) $1.8 million $10 million gain $9 million expense
C) $1.7 million $8.0 million gain $5 million gain
Your answer: C was incorrect. The correct answer was B) $1.8 million $10 million gain $9 million expense
When there is a reversal in the sign of the cash flows, it is likely that there will be multiple IRR solutions. In fact, for the cash flow stream {-1.8; 10; -9} the IRRs are 13 and 343%.
收藏 分享

torontoanalyst

Rank: 2

UID
223334 
帖子
263 
主题
43 
注册时间
2011-7-11 
最后登录
2013-9-9 
2#
发表于 2013-4-2 12:29 | 只看该作者
B is right.
not see any problem on the explanation. high nagitive cash flow will cause mutiple IRR since the “fuction” will have 2 values.
BTW, the “function” is the Quadratic Equation used in discounting NPV and IRR.

TOP

morebeans

Rank: 2

UID
223354 
帖子
192 
主题
39 
注册时间
2011-7-11 
最后登录
2016-4-19 
3#
发表于 2013-4-2 12:30 | 只看该作者
ya not A then u have 2 -ve signs in that too… when we have multiple times cash outlays we will have multiple IRR.. that’s my understanding is…. OR it is dependend on the size of the outlay as u said?

TOP

CFA4Techie

Rank: 1

UID
223374 
帖子
202 
主题
40 
注册时间
2011-7-11 
最后登录
2013-8-23 
4#
发表于 2013-4-2 12:30 | 只看该作者
it is not solely the size of the outlay
you may calc if you wish:
for A): -
NPV = -1.0 + 1.0/(1+x) + (-0.1)/(1+x)^2
Let NPV = 0 we get IRR.
so we need to solve this Quadratic Equation.
for y=ax^2+bx+c
we have x1=(1/2a)*(-b +(b^2-4ac)^0.5) AND x2=(1/2a)*(-b -(b^2-4ac)^0.5)
just solve it. if you get two different but meaningful X , that is multiple IRR

TOP

返回列表