Natalie is working on calculating the IRR of a project. Please refer to the figure above as you answer the questions below.
-In college, Natalie had to calculate IRR manually so that she would have a good understanding of the way it worked. To do that, she needed to guess an IRR value and substitute it as the ____ in the NPV formula.

Question

Quizplus · Accepted Answer

In order to manually calculate IRR, the user needs to guess an IRR value and substitute it as the discount rate in the NPV formula. The user will then calculate the resulting NPV and adjust their guess accordingly until the NPV equals zero, at which point the discount rate used in the formula is the IRR. Therefore, the answer is choice A) discount rate.

Natalie Is Working on Calculating the IRR of a Project