When calculating IRR with a trial and error process, discount rates should be raised when NPV is positive.

Question

Quizplus · Accepted Answer

When the NPV (Net Present Value) is positive, it indicates that the present value of future cash flows is greater than the initial investment, suggesting that the discount rate (or interest rate) is too low. Therefore, to find the IRR (Internal Rate of Return), the discount rate should be raised to reach a point where NPV equals zero.

When Calculating IRR with a Trial and Error Process, Discount