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State what an IRR solves
An IRR makes the schedule’s NPV equal zero. For equally spaced flows −100, 230 and −132, multiplying the NPV equation by (1 + r)² gives −100(1 + r)² + 230(1 + r) − 132 = 0. Both r = 10% and r = 20% satisfy it.
Inspect the entered sequence and computed display
- Enter the three-flow model in a cleared worksheetCF2ndCLR WORK
Store CF0 = −100, C01 = 230, F01 = 1, C02 = −132 and F02 = 1.
- Request the device calculationIRRCPT
A returned numerical root must be interpreted alongside the schedule; do not assume one displayed number proves uniqueness.
Check the candidate roots independently
| r | NPV |
|---|---|
| 10% | 0 |
| 15% | 0.189036 |
| 20% | 0 |
Distinguish a model without a root
If all cash flows are strictly positive, NPV is positive for every r > −100%, so there is no IRR in that domain. A missing root is not automatically a faulty key press. Read the actual schedule and rate domain, and use a stated discount-rate NPV when the research question requires it.