Question

Choi Computer Systems is considering a project that has the following cash flow data.

Year 0 1 2 3 Cash Flows -$1,000 $430 $480 $490 What is the project's IRR? Select one: a. 18.45% b. 19.05% c. 19.49% d. 20.58% e. Neither of the above

Answer 1

Internal rate of return can be calculated using a financial calculator by inputting the below:

• Press the CF button.
• CF0= -$1,000. The initial cash flow is indicated by a negative sign since it is a cash outflow.  
• Cash flow for each of the fifteen years should be entered.
• Press Enter and down arrow after inputting each cash flow.
• After entering the last cash flow cash flow, press the IRR and CPT button to get the IRR of the project.

The IRR of the project is 18.45%.

Hence, the answer is option a.