I have a series of cash flows such as:
-125 100 100 100 100
I want to figure out the outflows that would get to a 25% IRR. For this example, it would be:
-125 100 70
to get to a 25% IRR, with 30 left over in year 2.
Is there a formula that I could use to determine what the necessary cash flow is for each year would be to get to a 25% IRR, without going over? If the cash flow stream changes, it could be year 3 or year 4 that has leftover.
i.e. in the above example, is there a formula I can use to determine what the cash flow should be in a given year to hit a 25% IRR? The year it happens will change, and the cash flow itself will be different depending on the cash flow stream.