> Internal Rate of Return (IRR -http://en.wikipedia.org/wiki/Internal_rate_of_return) is a common financial > metric, used by investment firms to predict the profitability of a companyr > project. Finding the IRR of a company amounts to solving for it in the equation > for Net Present Value (NPV -http://en.wikipedia.org/wiki/Net_present_value), > another valuable decision-making metric: > > N C_t > NPV = ------------ > t=0 (1 + IRR)**t > > This week's quiz is to calculate the IRR for any given variable-length list of > numbers, which represent yearly cash flows, the C_t's in the formula above: C_0, > C_1, etc. (C_0 is typically a negative value, corresponding to the initialnvestment into the project.) From the example in the Wikipedia article > (http://en.wikipedia.org/wiki/Internal_rate_of_return), for instance, you should > be able to produce a rate of 17.09% (to four decimal places, let's say) from > this or a similar command: > > irr([-100,+30,+35,+40,+45]) > => 0.1709... I think one point, which isn't brought out here and not well in the wikipedia article either, is that given all of the C_t, you still have two unknowns: IRR (which we are attempting to solve for) and NPV. In this case, you want NPV set to zero in order to solve for IRR. Or did I miss something?