I think though you are getting confused

To a degree, I think you are correct insofar as my statement that ``the IRR is the cost of capital (5%) by definition`` was wrong.

I understand the

__mathematics__ of the IRR and NPV calculations very well. But I am not as knowledgeable about their

__application to business__ financial models -- other than the simple investment model.

My primary point was: 10.11% (

*sic*; actually 10.12% rounded) is

__never__ the corrrect IRR, as it was calculated by "rob". I can explain why mathematically, if that is not obvious to anyone.

My second point, for consideration, was or should have been: 15.62% might not be the correct IRR, either. It depends on the interpretation of the cash flows that "rob"provided

__without explanation__.

If we invested 3000 into a company or investment (written as -3000), and the business earns 500, 300 and 500 in subsequent years, and

__if that is all__ (i.e. the business has

__no remaining value__), 15.62% is indeed the IRR. And that might be different from the WACC.

But if the business is

__on-going__ (or it is has a

__terminal value__), the cash flows provided by "rob"

__fail to take into account__ the remaining value of the business. That should be "added" to the 500 earned in the last year. ("Added" by properly signing it as an outflow.)

And in that case, since "rob" did not provide that information, we

__cannot calculate the IRR__.

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You are right that I made the mistake of thinking that we can use the NPV of just those cash flows discounted by the WACC to make up for the lack of critical information (the remaining value of the business). That result is tautological -- and "illogical". Mea culpa!

Thanks for helping me to realize that.