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5) Matterhorn Mountain Gear is evaluating two projects with the following cash flows: Year 0 1 2 3 Project X -$ 317,200 147,200 164,700 129,800 Project Y -$295,200 137,850 155,050 120,800 What interest rate will make the NPV for the projects equal? |=(-317,200-(-295,200)) + (147,200-137,850)/(1+ IRR) + (164,700- 155,050) / (1 + 1 RR)² + (129, 800-120,800)/ (1 +1RR)³ - 0 = = 22,000 + 9,350 / (1+IRR) + 9,650/(1+ IRR)² +9,000/(1+IRR) ³ IRR = .1319 or 13.19%

5) Matterhorn Mountain Gear is evaluating two projects with the following cash flows: Year 0 1 2 3 Project X -$ 317,200 147,200 164,700 129,800 Project Y -$295,200 137,850 155,050 120,800 What interest rate will make the NPV for the projects equal? |=(-317,200-(-295,200)) + (147,200-137,850)/(1+ IRR) + (164,700- 155,050) / (1 + 1 RR)² + (129, 800-120,800)/ (1 +1RR)³ - 0 = = 22,000 + 9,350 / (1+IRR) + 9,650/(1+ IRR)² +9,000/(1+IRR) ³ IRR = .1319 or 13.19%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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can you please help explain how to solve for IRR in order to get the answer that is written at the end

5) Matterhorn Mountain Gear is evaluating two projects with the following cash flows: Year 0 1 2 3 Project X -$ 317,200 147,200 164,700 129,800 Project Y -$295,200 137,850 155,050 120,800 What interest rate will make the NPV for the projects equal? |=(-317,200-(-295,200)) + (147,200-137,850)/(1+ IRR) + (164,700- 155,050) / (1 + 1 RR)² + (129, 800-120,800)/ (1 +1RR)³ - 0 = = 22,000 + 9,350 / (1+IRR) + 9,650/(1+ IRR)² +9,000/(1+IRR) ³ IRR = .1319 or 13.19%
Transcribed Image Text:5) Matterhorn Mountain Gear is evaluating two projects with the following cash flows: Year 0 1 2 3 Project X -$ 317,200 147,200 164,700 129,800 Project Y -$295,200 137,850 155,050 120,800 What interest rate will make the NPV for the projects equal? |=(-317,200-(-295,200)) + (147,200-137,850)/(1+ IRR) + (164,700- 155,050) / (1 + 1 RR)² + (129, 800-120,800)/ (1 +1RR)³ - 0 = = 22,000 + 9,350 / (1+IRR) + 9,650/(1+ IRR)² +9,000/(1+IRR) ³ IRR = .1319 or 13.19%
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