Solving for the interest rate associated with a stream of uneven cash flows,without the use of a calculator,usually involves a trial and error process.

Question

Quizplus · Accepted Answer

Solving for the interest rate associated with a stream of uneven cash flows requires the use of an iterative method to find the discount rate that equates the present value of the cash inflows with the initial investment. This process usually involves a trial and error method using different interest rate assumptions until the net present value of the cash flows is zero. Therefore, the statement is true.

Solving for the Interest Rate Associated with a Stream of Uneven