- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 2. Time Value of Money in Finance
- Subject 1. Time Value of Money

###
**CFA Practice Question**

What is the annual internal rate of return of this series of annual cash flows?

Year 0: <$6,000>, Year 1: $4,000, Year 2: $3,000, Year 3: $2,000, Year 4: $1,000 (Note that the <> is used to indicate a negative number.)

A. 31.38%

B. 33.74%

C. 24.61%

**Explanation:**On the BAII Plus:

Press CF 2nd CLRWork 6000 ENTER DownArrow 4000 ENTER DownArrow DownArrow 3000 ENTER DownArrow DownArrow 2000 ENTER DownArrow DownArrow 1000 ENTER DownArrow DownArrow 2nd Quit. Then press Irr CPT.

On the HP12C:

Press these keys: 6000 CHS BlueShift CFo 4000 BlueShift CFj 3000 BlueShift CFj 2000 BlueShift CFj 1000 BlueShift CFj. Then press YellowShift Irr. The "DownArrow" represents the downward-pointing arrow on the top row of the BAII Plus keyboard. Make sure that the BAII Plus has the P/Y value set to 1.

###
**User Contributed Comments**
1

User |
Comment |
---|---|

Haiqing |
BAII plus: -6000 you should press 6000 [+/-] |