The following investment cash flows have been entered into cells B5 through B9 of an EXCEL spreadsheet. B5 $(5,200 ), B6 $2,100, B7 $1,300, B8 $1,800, B9 $1,200, where $(5,200) is the cost of the investment and the following amounts are cash flows at the end of years one through four. The correct function for computing the yield on this investment is
A) =irr(B6:B9)+B5.
B) =irr(B5:B9).
C) =rate(4,0,-5200, 1200).
D) =ytm(B5, B6:B9).

Question

Quizplus · Accepted Answer

The correct function for computing the yield on this investment, which includes both the initial cost and the subsequent cash flows, is =irr(B5:B9). This function calculates the internal rate of return for a series of cash flows represented by the numbers in cells B5 through B9.

The Following Investment Cash Flows Have Been Entered into Cells