HP 10bII - Page 129

B: More About Calculations 129
B
More About Calculations
IRR/YR Calculations
7KHFDOFXODWRUGHWHUPLQHV,55<5IRUDVHWRIFDVKIORZVXVLQJ
PDWKHPDWLFDOIRUPXODVWKDWVHDUFKIRUWKHDQVZHU7KHSURFHVV
ILQGVDVROXWLRQE\HVWLPDWLQJDQDQVZHUDQGWKHQXVLQJWKDW
HVWLPDWHWRGRDQRWKHUFDOFXODWLRQ7KLVLVFDOOHGDQLWHUDWLYH
SURFHVV
,QPRVWFDVHVWKHFDOFXODWRUILQGVWKHGHVLUHGDQVZHUVLQFHWKHUH
LVXVXDOO\RQO\RQHVROXWLRQWRWKHFDOFXODWLRQ+RZHYHU
FDOFXODWLQJ,55<5IRUFHUWDLQVHWVRIFDVKIORZVLVPRUHFRPSOH[
7KHUHPD\EHPRUHWKDQRQHRUQRPDWKHPDWLFDOVROXWLRQWR
WKHSUREOHP,QWKHVHFDVHVWKHFDOFXODWRUGLVSOD\VDPHVVDJHWR
KHOS\RXLQWHUSUHWZKDWKDVKDSSHQHG
Possible Outcomes of Calculating IRR/YR
7KHVHDUHWKHSRVVLEOHRXWFRPHVRIDQ,55<5FDOFXODWLRQ
n Case 1.7KHFDOFXODWRUGLVSOD\VDSRVLWLYHDQVZHU7KLVLVWKHRQO\
SRVLWLYHDQVZHU+RZHYHURQHRUPRUHQHJDWLYHDQVZHUVPD\H[LVW
n Case 2.7KHFDOFXODWRUILQGVDQHJDWLYHDQVZHUEXWDVLQJOHSRVLWLYH
DQVZHUDOVRH[LVWV,WGLVSOD\V
Pos Irr Also7RVHHWKHQHJDWLYH
DQVZHUSUHVV
R WRFOHDUWKHPHVVDJH7RVHDUFKIRUWKHSRVLWLYH
DQVZHU\RXPXVWLQSXWDJXHVV5HIHUWR´(QWHULQJD*XHVVIRU
,55<5µEHORZ7KHUHPLJKWDOVREHDGGLWLRQDOQHJDWLYHDQVZHUV
n Case 3.7KHFDOFXODWRUGLVSOD\VDQHJDWLYHDQVZHUDQGQRPHVVDJH
7KLVLVWKHRQO\DQVZHU
n Case 4.7KHFDOFXODWRUGLVSOD\VWKHPHVVDJHNot Found7KLV
LQGLFDWHVWKDWWKHFDOFXODWLRQLVYHU\FRPSOH[,WPLJKWLQYROYHPRUH
WKDQRQHSRVLWLYHRUQHJDWLYHDQVZHURUWKHUHPD\EHQRVROXWLRQ
7RFRQWLQXHWKHFDOFXODWLRQ\RXPXVWVWRUHDJXHVVVHHEHORZ
appendix_B.fm Page 129 Thursday, June 22, 2000 12:33 PM