Question

Project L costs $58,631.36, its expected cash inflows are $13,000 per year for 10 years, and its WACC is 11%. What is the project's IRR? Round your answer to two decimal places.

Answer 1

Sol:

Project cost = $58,631.36

Cash inflows = $13,000 per year for 10 years

WACC = 11%

To determine project IRR we can use IRR function in excel:

Period	Cash Flows
0	-$58,631.36
1	$13,000
2	$13,000
3	$13,000
4	$13,000
5	$13,000
6	$13,000
7	$13,000
8	$13,000
9	$13,000
10	$13,000
IRR	17.90%

Therefore project's IRR will be 17.90%

Working