Internal rate of return

$NPV= -A+\sum_{t=0}^{T} \frac{EZU}{(1+EZF)^t} $

Hey guys.

can someone please adjust this equation in a way where I have all the values Except for (EZF). In a way replacing NPV and EZF

1 Answer

Using the formula for geometric series (https://en.wikipedia.org/wiki/Geometric_series) we get 
$$NPV= -A+\sum_{t=0}^{T} \frac{EZU}{(1+EZF)^t}=-A+EZU(\frac{1-(1+EZF)^{T+1}}{1-(1+EZF)}) $$
\[=-A+\frac{EZU}{EZF}[(1+EZF)^{T+1}-1].\]
Hence
\[\frac{(1+EZF)^{T+1}-1}{EZF}=\frac{(NPV+A)}{EZU}.\]
This equation can not be explicitly solved in terms of $EZF$ and one needs to solve it numerically. 

Erdos Erdos
4.6K
  • Azhy Azhy
    +1

    sorry, I think there has been a confusion. EZF and EZU are two different values, you can simply replace them with X and Y

    • Erdos Erdos
      0

      I revised my solution.

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