Challenge to ca finalists

Ans

a. Without having cash inflow details, how can IRR be calculated??? If yes, please provide the solution.

b. Method B will be chosen because PV of NCO of B is lower than PV of NCO of A. It will save approx Rs. 63330/- in PV terms.

the cashflows given are already the difference between the inflows are outflows...i.e net flow is given..rest is easy

@ Ubaid:

Please provide the solution if you know the answer for pt a. I know that net cash outflow is provided. But you cannot have negative irr as far as I think. It is not that easy as it seems to be.

i know its not easy...the 2nd part is easy...i think u are wrong about "irr cant be negative"

Okk I might be wrong. I had an opinion that irr cannot be negative (Which already i have mentioned as i think.) But I want the solution for part a. Part b already I answered. And I felt that easy. My opinion was wrt pt a. Do you have answer for pt a, then please provide the solution as I want to know how it is to be solved? 

p.s this solution might be incorrect...u are the best judge..

i used this working

0= -300000 - (66000/1.R + 66000/1.R2.......)

by doing that i got the R as -3% in method one

i understand that using negative IRR in a real life situation feels impracticle but heres what i got.

I just confirmed this query from a caclub expert/professor....he said if all npvs are -ve,there cannot be an IRR..and i agree

The formula of IRR is [P1/(1+IRR)^1 + P2/(1+IRR)^2 + P3/(1+IRR)^3 + . . . +Pn/(1+IRR)^n] - P0 =0

There will not be any IRR in the given case according to me.

@ Ubaid: 

The working that you showed should have 1+r and not 1.r? Correct me if I m wrong

According to me, IRR will not be possible in case of all positive or all negative values.

Experts, correct me if I m wrong?

1.r = 1+r dude... for e.g my rate is 10% 

so 1.r = 1.1 and 1+r = 1+ 0.1 = 1.1

and yeah u are absolutely right....btw the formula u showed is the same thing i did...

@ Ubaid:

Ok . I thought u used "." as a multiplication sign. So I clarified. Anyways thanks that you mean the same.