Question

What is the Internal Rate of Return on an investment with the following cash flows?

Year Cash Flow...

0 -$761,125

1 $330,500

2 $454,700

3 $161,200

Answers:

a. 12.93 percent

b. 9.42 percent

c. 11.88 percent

d. 14.71 percent

e. 10.96 percent

Answer #1

Ans) a. 12.93 percent

Internal rate of return is the rate at which NPV is 0

Assume r = 12% , then NPV =

Year | Cash flow | PVIF @ 12% | PV |

1 | 330500 | 0.8929 | 295089.29 |

2 | 454700 | 0.7972 | 362484.06 |

3 | 161200 | 0.7118 | 114738.98 |

Total of PV of cash inflow | 772312.32 | ||

Less : Initial cash outflow | 761125 | ||

NPV | 11187.32 |

Assume r = 13% , then NPV =

Year | Cash flow | PVIF @ 13% | PV |

1 | 330500 | 0.8850 | 292477.88 |

2 | 454700 | 0.7831 | 356096.80 |

3 | 161200 | 0.6931 | 111719.69 |

Total of PV of cash inflow | 760294.36 | ||

Less : Initial cash outflow | 761125 | ||

NPV | -830.64 |

Using interpolation we can find IRR

r | NPV |

12% | 11187.32 |

13% | -830.64 |

1% | 12017.96 |

? | 11187.32 |

=11187.32 / 12017.96

= 0.93%

Thus IRR = 12%+0.93% = 12.93%

A project has the following cash
flows. What is the internal rate of return?
Year
0
1
2
3
Cash flow
-$782,100
$219,500
$348,600
$348,600

You are considering an investment with the following cash flows.
If the required rate of return for this investment is 16.5 percent,
should you accept the investment based solely on the internal rate
of return rule? Why or why not?
Year: 0, 1, 2, 3
Cash Flow: -152000, 98,200, 102,300, -4,900
A.
Yes; The IRR exceeds the required return.
B.
Yes; The IRR is less than the required return.
C.
No; The IRR is less than the required return.
D....

compute the internal rate of return for the cash flows of the
following two projects (Do not round intermediate calculations.
Enter your answers as a percent rounded to 2 decimal places, e.g.,
32.16.):
year
project A
PROJECT B
0
-6800
-4400
1
2600
1500
2
3400
2900
3
2200
1800

What is the Modified Internal Rate of Return (MIRR) for the
following cash flows? Assume that the required rate of return is
4%
Year
CFs
0
-1,000
1
100
2
200
3
350
4
800

A project will generate the following cash flows. If the
required rate of return is 15%, what is the project’s net present
value?
Year
Cash flow
0
–$50,000
1
$15,000
2
$16,000
3
$17,000
4
$18,000
5
$19,000
Select one:
a. $16,790.47
b. $6,057.47
c. $3,460.47
d. $1,487.21
e. –$3,072.47
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Question text
A project will generate the following cash flows. The required
rate of return is 15%. If the...

A project has the following cash flows. What is the internal
rate of return? THE ANSWER IS 21.32% PLEASE SHOW WORK WITHOUT USING
EXCEL
YEAR 0 1 2 3
NET INCOME -$390,000 $168,000 $190,000 $218,600

1. What's the internal rate of return of the following cash
flows with a 8% WACC?
2. What's the modified internal rate of return of the following
cash flows with a 8% WACC?
Year 0 = 100,000
Year 1 = 10,000
Year 2 = 50,000
Year 3 = 45,000
Year 4 = 25,000
3. How long should a company keep the following project?
WACC = 8%
CF year 0 = 1,500,000
Salvage = 1,500,000
CF year 1 = 750,000
Salvage...

A company is evaluating an investment project with the following
forecast cash flows:
Year
0
1
2
3
4
Cash flow($m)
(6.5)
2.4
3.1
2.1
1.8
Using discount rates of 15% and 20%, what is the internal rate
of return of the investment project?

Consider the following cash flows for two mutually exclusive
capital investment projects. The required rate of return is 16%.
Use this information for the next 3 questions. Year Project A Cash
Flow Project B Cash Flow 0 ($50,000) ($20,000) 1 15,000 6,000 2
15,000 6,000 3 15,000 6,000 4 13,500 5,400 5 13,500 5,400 6 6,750
5,400 What is the profitability index of project B?
Answers:
a.1.06
b. 1.01
c.1.09
d. 1.03
e. .94

What are the Net Present Value and Internal Rate of Return for
the following cash flows - assuming a 3.5% discount rate?
Year 0: ($35,900)
Year 1: $20,750
Year 2: ($16,750)
Year 3: $32,100
Year 4: $12,525
Year 5: $18,220
Is the project profitable on a discounted basis? Is it something
we would want to pursue as an organization?

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