Please let me know which part of this question is asking for you to find the IRR at NPV 0?
Trying to understand the way how CFA phase their questions in the exam.
Thanks a lot.
The IRR is defined as the the discount rate when the NPV = 0. This is a fact you need to know.
The negative NPV of -20 will come when the discount rate used is 12%
Thanks for the reply. Yes that’s the fact I knew but i wasn’t expecting this is what the question is asking.
I also recall the CFA materials mentioned comparing the NPVs of different investments when considering capital allocations. MM’s video also said the same thing if I recall correctly. In real estate, people do make the NPV = 0 to get the IRR. I now kind of doubt if this is right thing to do…as NPV should take precedent over the IRR… anyways…just frustrating.