DSC1630
Introductory Financial Mathematics
Department of Decision Sciences
Assignment 04 for 2021 AS PER UPDATED TUTORIAL
LETTER
Unique assignment number: 293441
Due Date: 30 July 2021
Question 1
An investment with an initial outlay of R500 000 generates five successive annual cash
inflows of R75 000, R190 000, R40 000, R150 000 and R180 000 respectively. The internal
rate of return (IRR) is
[1] 7,78%.
[2] 27,0%.
[3] 9,48%.
[4] 21,3%.
[5] none of the above.
Answer:
The internal rate of return method (IRR) determines the interest rate that equates future
returns to the present investment outlay.
Using the Sharp EL-138F calculator:
, OR:
75 000 190 000 40 000 150 000 180 000
0= + (1+𝑅)2
+ (1+𝑅)3 + (1+𝑅)4
+ (1+𝑅)5
− 500 000
1+𝑅
Introductory Financial Mathematics
Department of Decision Sciences
Assignment 04 for 2021 AS PER UPDATED TUTORIAL
LETTER
Unique assignment number: 293441
Due Date: 30 July 2021
Question 1
An investment with an initial outlay of R500 000 generates five successive annual cash
inflows of R75 000, R190 000, R40 000, R150 000 and R180 000 respectively. The internal
rate of return (IRR) is
[1] 7,78%.
[2] 27,0%.
[3] 9,48%.
[4] 21,3%.
[5] none of the above.
Answer:
The internal rate of return method (IRR) determines the interest rate that equates future
returns to the present investment outlay.
Using the Sharp EL-138F calculator:
, OR:
75 000 190 000 40 000 150 000 180 000
0= + (1+𝑅)2
+ (1+𝑅)3 + (1+𝑅)4
+ (1+𝑅)5
− 500 000
1+𝑅
