How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Scott Your Own Question
Scott, MIT Graduate
Category: Finance
Satisfied Customers: 17710
Experience:  I manage my own money -- stocks, bonds, 401k, etc.
Type Your Finance Question Here...
Scott is online now
A new question is answered every 9 seconds

Please Help, What is a simplified way to compute IRR if a ...

This answer was rated:

Please Help, What is a simplified way to compute IRR if a projected return is $17,000 3 years from now if the initial cost was only 12,000?

The IRR is basically the percentage rate of increase per year.

The formula for this is:

P = A(1 + r)^t, and we need to solve for r, where P is the amount at the end of t years, starting with A.

Plug in what we have:
17000 = 12000(1+r)^3
Divide by 12000:
(1+r)^3 = 17/12
Take the cube root:
1+r = cuberoot(17/12)
Subtract 1:
r = cuberoot(17/12) - 1
r = 0.12311
r = 12.311%

Let me know if you have any questions. If not, thanks for pressing "Accept".

Scott and other Finance Specialists are ready to help you