Question

Must show all work and be in EXCEL format-formulas must be shown Frenchies, Inc. is considering...

Must show all work and be in EXCEL format-formulas must be shown

Frenchies, Inc. is considering a major investment. The investment will have an initial cost of $630,000 and will be depreciated straight-line to a zero book value over the life of the project. The cash inflows generated by the project are estimated at $255,000 for the first three years and $25,000 for the following five years. What is the internal rate of return?

Homework Answers

Answer #1

IRR is to be calculated in excel bu formula
=IRR(values,[guess])
IRR = 15.60%

Year Cashflow
0 -630000
1 255000
2 255000
3 255000
4 25000
5 25000
6 25000
7 25000
8 25000
IRR 15.60%

I hope this clear your doubt.

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Note- Cash Inflows are given after treatment of Depreciation amount

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