Question

What is the IRR of the following set of cash flows?

Year Cash Flow

0 -11,109

1 4,500

2 6,800

3 5,500

A) 21.85%, B) 23.46%, C) 23%, D) 24.15%, E) 22.54%

Answer #1

**The correct choice is C ) 23%**

Annuity = ( $ 4500 + $ 6800 + $ 5500) 3

Annuity = $ 5600

Payback period = $ 11,109 $ 5600

Payback period = 1.98375

From the present value interest factor annuity table, find the interest rate close to 1.98375 for n = 3 years

From the table , we find the interest rate as 24%

Find the net present value of cash flows at r = 24%

NPV @ 24% = -172.81

Find the net present value of cash flows at r = 23%

NPV @ 23% = - 0.17277

NPV @ 22% = 177.07

IRR = 22% + [ 11286 - 11109 ] [ 11286 - 11108.83 ]

IRR = 23%

What is the IRR of the following set of cash flows? Year Cash
Flow 0 –$10,904 1 4,400 2 5,500 3 6,100 rev: 09_18_2012

What is the IRR of the following set of cash flows?
Year Cash Flow
0 –$9,496
1 6,500
2 3,400
3 3,900

What is the IRR of the following set of cash flows?
Year
Cash Flow
0
–$9,791
1
6,700
2
4,200
3
3,500

What is the IRR of the following set of cash flows? Year Cash
Flow 0 –$13,472 1 7,000 2 6,200 3 6,400

What is the IRR of the following set of cash flows?
Year Cash Flow
0
–$9,259
1
3,100
2
4,700
3
6,600
rev: 09_18_2012
22.01%
23.58%
21.34%
22.91%
22.46%

P9-10 Calculating IRR [LO5]
What is the IRR
of the following set of cash flows?
Year
Cash Flow
0
–$11,710
1
6,600
2
6,800
3
3,400
Multiple Choice
23.32%
22.4%
21.72%
24%

For the following set of cash flows,
Year
Cash Flow
0
–$6,800
1
3,800
2
3,700
3
5,000
a. What is the NPV at a discount rate of 0 percent?
b. What is the NPV at a discount rate of 12 percent?
c. What is the NPV at a discount rate of 24 percent?
d. What is the NPV at a discount rate of 29 percent?

What is the payback period for the following set of cash
flows?
Year
Cash flow
0
-$40,000 (it is minus!)
1
$10,000
2
$5,000
3
$20,000
4
$5,000
5
$10,000
A.
2 years
B.
4 years
C.
3 years
D.
1 year
E.
5 years

1.
What is the payback period for the following set of cash
flows?
Year
Cash Flow
0
−$ 8,000
1
2,800
2
1,000
3
2,900
4
2,100
Multiple Choice
3.57 years
3.80 years
3.64 years
3.92 years
3.62 years
2.
An investment project provides cash inflows of $650 per year
for 8 years.
a. What is the project payback period if the
initial cost is $3,250?
b. What is the project payback period if...

What is the payback period for the following set of cash flows?
Year Cash Flow 0 −$ 4,300 1 2,000 2 1,800 3 2,000 4 2,200

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