how to compute the implied discount rate

[omartarek2723]

hello,

can someone help me how to calculate the implied discount rate like this example

 

[Kat Maple]

Hi Omartarek

You need to use a financial calculator or Excel to use a function called IRR, internal rate of return. First read the directions provided with either Excel or the financial calculator on how to use the function. Most likely you will set the $2,000,000 as the initial cash out and the 24 payments each as $92,000 cash in. Then solve for the internal rate of return, which here is the implied interest rate.

Regards,

Kat