Hi All, First time poster here. Got this problem below and I do not know how to solve for "r". Thanks so much for any help!

What is the context in which you "got this problem"? Why do you need to "solve for r"? Is it for school, or something else?

An equation like this can't be solved algebraically, to give an exact value. There are various numerical methods for finding approximate solutions, such as those employed by a graphing calculator or various kinds of mathematical software, which any engineer or other person needing to solve such an equation should have been taught to use.

You might try wolframalpha.com, for example.
 
Dr.Peterson said:
What is the context in which you "got this problem"? Why do you need to "solve for r"? Is it for school, or something else?

An equation like this can't be solved algebraically, to give an exact value. There are various numerical methods for finding approximate solutions, such as those employed by a graphing calculator or various kinds of mathematical software, which any engineer or other person needing to solve such an equation should have been taught to use.

You might try wolframalpha.com, for example.
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Thanks. It is not for school...I am long out of school. I am studying investment valuation....and this was in the text where they just followed by saying "solving for r this gives us the required return of 8.49%..." (Damodaran, Investment Valuation, 2012, page 174) I may have been able to do this years ago in college but it baffles me now!
 
Dear Dr. Peterson: Thanx I did go to wolframalpha, per your recommendation. They solved it. Amazing website. However, I couldn't see the steps. I wonder if I can do such an equation in Excel or with a hand-held.
 
JohnnyMoe said:
Dear Dr. Peterson: Thanx I did go to wolframalpha, per your recommendation. They solved it. Amazing website. However, I couldn't see the steps. I wonder if I can do such an equation in Excel or with a hand-held.
Click to expand...

This is not the sort of thing where you expect to be given steps to do it by hand! (Yes, it could be done by hand on a calculator or even on paper, but that's a waste of time.) This is something you let technology do for you.

Yes, Excel can do it, and a graphing calculator can do it (not an ordinary calculator, though some scientific calculators can). Online graphing sites, like Desmos, can not only graph a function like yours, but show numerical values of intersections. (Seeing the graph can be helpful to gain an understanding of how many solutions there are, and where to look for them.)

I don't do this sort of thing much with Excel, but one way to do it is with Goal Seek, which will find a value of r to obtain the desired value of your function.

It's possible that somewhere in your book they have mentioned tools to use for solving equations.
 
JohnnyMoe said:
Dear Dr. Peterson: Thanx I did go to wolframalpha, per your recommendation. They solved it. Amazing website. However, I couldn't see the steps. I wonder if I can do such an equation in Excel or with a hand-held.
Click to expand...
I am new to this thread and do not have time to look at it carefully, but excel probably has the function you want. Look under financial functions for IRR
 
JohnnyMoe said:
Dear Dr. Peterson: Thanx I did go to wolframalpha, per your recommendation. They solved it. Amazing website. However, I couldn't see the steps. I wonder if I can do such an equation in Excel or with a hand-held.
Click to expand...
You can use "goal seek" function in Excel to estimate the solution.
 
I should warn you. The IRR computation may give multiple answers, depending on what initial guess you supply it. So make a reasonable guess.
 
Dr.Peterson said:
This is not the sort of thing where you expect to be given steps to do it by hand! (Yes, it could be done by hand on a calculator or even on paper, but that's a waste of time.) This is something you let technology do for you.

Yes, Excel can do it, and a graphing calculator can do it (not an ordinary calculator, though some scientific calculators can). Online graphing sites, like Desmos, can not only graph a function like yours, but show numerical values of intersections. (Seeing the graph can be helpful to gain an understanding of how many solutions there are, and where to look for them.)

I don't do this sort of thing much with Excel, but one way to do it is with Goal Seek, which will find a value of r to obtain the desired value of your function.

It's possible that somewhere in your book they have mentioned tools to use for solving equations.
Click to expand...
Thanks, I have used Goal Seek, so I will look into that.
 
JohnnyMoe said:
Thanks, I have used Goal Seek, so I will look into that.
Click to expand...
As it has been mentioned before - it will be advisable to get a reasonable first estimate - before applying goal-seek. That can be done using any graphing software (WA can do it too!).

Also - I would "visually" simplify the function by substitution (e.g. u = 1 + r).
 
Subhotosh Khan said:
As it has been mentioned before - it will be advisable to get a reasonable first estimate - before applying goal-seek. That can be done using any graphing software (WA can do it too!).

Also - I would "visually" simplify the function by substitution (e.g. u = 1 + r).
Click to expand...
Thx Subhotosh, and great Voltaire quote!
 
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