Calculating Investment Returns: NPV, IRR, MIRR, and Stock Valuation

Which Calculations Can Be Performed Without Knowing the Required Rate of Return?

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Question

Which of the following calculations can be successfully performed without knowing the required rate of return?

I.Net Present Value -

II.Internal Rate of Return -

III.Modified Internal Rate of Return

IV.Time-Weighted Rate of Return -

V.Dollar-Weighted Rate of Return

VI.Valuing a common stock using the Dividend Discount Model

VII.Valuing a common stock using the Free-Cash-Flow-to-Equity Model

Answers

A. II, V, VI

B. II, IV, V

C. I, II, VI

D. II, IV, V, VI, VII

E. II, IV, VI, VII

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Explanations

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A. B. C. D. E.

Of the financial figures listed, only the Internal Rate of Return, which is also known as the "Dollar-weighted Rate of Return," and the Time-Weighted Rate of

Return, can be calculated without knowing the required rate of return.

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