Calculations of the IRR Based on a Value of R

question 14

Multiple Choice

Calculations of the IRR based on a value of r = 5% give a NPV value of £234,000. Trying the effect of increasing and decreasing r gives - £876,000 when r = 10% and £456,000 when r = 2%. Which of the following values of r is most likely to be correct?

• A) 9.7%
• B) 6.2%
• C) 1.7%
• D) 2.5%

---

Definitions:

Source 1-Destination 1

Represents a simplified notation for mapping a specific source to a specific destination, often used in logistics and data flow diagrams.

Problem Data Set

A collection of data or information that relates to a particular problem or challenge to be analyzed or solved.

Northwest-corner Rule

A method used in transportation problem solutions in operations research, starting allocation from the northwest corner of a cost matrix and moving through the matrix to minimize costs.

Transportation Problem

A type of optimization problem in operations research aimed at determining the most efficient way of allocating resources to transport goods from suppliers to consumers, minimizing cost.