CFA Practice Question

There are 233 practice questions for this study session.

CFA Practice Question

Beaumont Bearings is analyzing two mutually exclusive projects with the following cash flows. Its cost of capital is 9%.

The IRRs for the two projects are:
A. X: 34.55%; Y: 27.87%
B. X: 10.5%; Y: 12.9%
C. X: 46.45%; Y: 54.85%
Explanation: By setting the NPV equal to zero and solving for the discount rate with the help of a financial calculator:

IRRX = 46.45%, IRRY = 54.85%

User Contributed Comments 5

User Comment
myanmar is this irr too high for the TI BAII Plus i only get an "error 7" with this but "normal" irr's with other smaller cash flows in the years 1 to 3?
gizi You did something wrong myanmar. The BA II Plus provides the coorect answer.
swallow2585 can someone show the calc key in for BAII?
clipp make sure to put in the negative outflow for C0. Then after inputting cash flows select "IRR" then "CPT" and you get your answer.
deleseleuc CFo 10,000 (+-) ENTER
Down Arrow
CF01 8,000 ENTER
Down Down
CF02 7,000 ENTER
Down Down
CF03 4,000 ENTER
IRR > CPT
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