University | Singapore Management University (SMU) |
Subject | Python |
The IRR (intone] rate of return) is the interest rate that makes the net present value (NPV) of all cash flows equal to 0 M a discounted cash flow analysis. Given cashflows C (where C. is the initial investment and C, is the net cash flow at period 1 < t S T, we have IRR as the solution to:
Unfortunately, there is no analytical solution (i.e., no nice formula) for IRR and so numerical libraries like NumPy financial use numerical methods to find the IRR. In this question, we will attempt to find the IRR using two numerical methods. In this question, you may use numpy_financialsine to calculate NPV.
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