- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 5. Capital Investments and Capital Allocation
- Subject 2. Capital Allocation

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**CFA Practice Question**

An investment costs $77,500 and pays $27,500 a year for four years. What is the IRR of this investment?

B. 24.4%

C. 15.6%

A. 22.3%

B. 24.4%

C. 15.6%

Correct Answer: C

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**User Contributed Comments**
11

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

zhaojiang |
PV=-77,500 PMT=27,500 N=4, FV=0, CPT I/Y=15.64 |

synner |
CF0=-77500, C01=27500,F01=4 CPT IRR = 15.6 |

synner |
CF0=-77500, C01=27500,F01=4 CPT IRR = 15.6 |

aigulb |
on HP i get: 77.5 chs g cfo 27.5 g cfj 4 n f irr = 22.8% what i did wrong? |

whipp |
use 4 g Nj instead of 4 n |

mwali |
My BAII Plus calculator does not seem to be working . Please help |

timothykoo |
Be sure you clear the worksheet before you key in, synner's way of solution. I have the same problem. Just hit 2nd and ce|c (or CLR WORK). |

chris12345 |
mwali, make sure you put your minus sign on the PV! |

Kobe8kenji |
thanks chris! u solved my error in my BA plus |

jonan203 |
whipp: by pressing <n>, in this case, you discount a SINGLE cashflow of $27,500 for four periods <Nj> discounts FOUR separate cash flows of $27,500 |

rjdelong |
yep Chris is the man! |