The cash flows for project mix commercial mixer at Diana’s donut shop as follows: End-of-year cash flows Year 0: – 900, year 1: 400, year 2: 300, year 3: 150 The firm’s WACC is 10%. What is the IRR for project commercial mixer? Please show your work, don’t just show excel formula.
Let r be the IRR for this project
So at IRR NPV=0
Sum of PV of All cash flow=0
CF =cash flow
n =Year in whicA business that calculates a negative IRR for a prospective investment should not make the investment.h cash flow occur
so solving for r we IRR=-3.28%
When the aggregate amount of cash flows caused by an investment is less than the amount of the initial investment then negative IRR occur.A business that calculates a negative IRR for a prospective investment should not make the investment.
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