Practice exam 3 task 5 mistake
It seems we forgot to include $5.6m return which was earned in year 1. In that case the numerator of the second term shall be -200+5.6, and IRR would be approximately 19.8%.
I didn't watch an explanation after first trials, so I met the right answer when I at random thought: "Maybe we just throw away those $5.6m" :)
Hello Ruslan!
Thanks for reaching out!
I would suggest that you check the Excel file which contains the explanations for the question. The 5.6 mn you refer to is included in the calculations . But here we want to see all the cash inflows and outflows. We have a cash investment of $20 mn at the beginning, additioanal $200 mn at the start of Year 2 and then the liquidation value of $261.60 mn.
I hope that this helps.
Best,
The 365 Team
Hello Ivan!
I understood, I accounted those $5.6m twice. As income in year 1 (though we didn't withdrew money) and when reinvested them in year 2.
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