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Chapter 20. Building Discount Formulas > Calculating Multiple Internal Rates of...

Calculating Multiple Internal Rates of Return

Rarely does a business pay cash for major capital investments. Instead, some or all of the purchase price is usually borrowed from the bank. When calculating the internal rate of return, two assumptions are made:

  • The discount for negative cash flows is money paid to the bank to service borrowed money.

  • The discount for positive cash flows is money reinvested.


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