Question

Billabong Tech uses the *internal rate of return (IRR)*
to select projects. Calculate the IRR for each of the following
projects and recommend the best project based on this measure.
Project T-Shirt requires an initial investment of $18,167 and
generates cash inflows of $8,500 per year for 55 years. Project
Board Shorts requires an initial investment of $28,000 and produces
cash inflows of $11,500 per year for 66 years.

The IRR of project T-Shirt is _____ (Round to two decimal places.)

The IRR of project Board Shorts is ____(Round to two decimal places.)

Based on the internal rate of return, which project should the firm choose

Answer #1

The IRR would be

Project T Shirt = 46.79%

Project Shorts = 41.07%

Based on IRR, Project shorts would be choosen because it has higher IRR.

The calculations are shown in the pic below. PS Some rows have been hidden to show the complete excel sheet in the pic.

Billabong Tech uses the internal rate of return (IRR) to select
projects. Calculate the IRR for each of the following projects and
recommend the best project based on this measure. Project T-Shirt
requires an initial investment of $17,333 and generates cash
inflows of $8,500 per year for 4 years. Project Board Shorts
requires an initial investment of $26,500 and produces cash
inflows of $13,500 per year for 5 years.
Thee IRR of the Project Terra is _____?____% Round to two...

4. Internal rate of return (IRR) The internal rate of return
(IRR) refers to the compound annual rate of return that a project
generates based on its up-front cost and subsequent cash flows.
Consider the case of Blue Llama Mining Company: Blue Llama Mining
Company is evaluating a proposed capital budgeting project (project
Sigma) that will require an initial investment of $800,000. The
company has been basing capital budgeting decisions on a project’s
NPV; however, its new CFO wants to...

Internal rate of return For the project shown
in the following table, calculate the internal rate of
return
(IRR). Then indicate, for the project, the
maximum cost of capital that the firm could have and still find the
IRR acceptable.
The project's IRR is %. (Round to two decimal places.)
Initial investment
(CF
0CF0)
$110,000
Year
(t)
Cash inflows
(CF Subscript
tCFt)
1
$25,000
2
$50,000
3
$30,000
4
$35,000
5
$10,000

For the project shown in the following table,
calculate the internal rate of return (IRR). Then indicate,
for the project, the maximum cost of capital that the firm could
have and still find the IRR acceptable.
Initial investment
(CF 0CF0)
$80,000
Year
(t)
Cash inflows
(CF Subscript tCFt)
1
$25,000
2
$45,000
3
$30,000
4
$30,000
5
$15,000

Find the internal rate of return (IRR) for the following
project. The project requires an initial investment of $ 11 comma
000 and provides 5 annual cash inflows of $ 29 comma 200 . Assume a
cost of capital of 7.8 % .

Modified internal rate of return (MIRR)
The IRR evaluation method assumes that cash flows from the
project are reinvested at the same rate equal to the IRR. However,
in reality the reinvested cash flows may not necessarily generate a
return equal to the IRR. Thus, the modified IRR approach makes a
more reasonable assumption other than the project’s IRR.
Consider the following situation:
Fuzzy Button Clothing Company is analyzing a project that
requires an initial investment of $500,000. The project’s...

Internal rate of return For the project shown in the following
table,
LOADING...
, calculate the internal rate of return
(IRR).
Then indicate, for the project, the maximum cost of capital that
the firm could have and still find the IRR acceptable.
The project's IRR is
nothing %.
(Round to two decimal places.)
Initial investment
(CF 0CF0)
$120 comma 000120,000
Year
(t)
Cash inflows
(CF Subscript tCFt)
1
$20 comma 00020,000
2
$35 comma 00035,000
3
$45 comma 00045,000
4...

Internal rate of return For the project shown in the
following table, calculate the internal rate of return
(IRR). Then indicate, for the project, the maximum cost of
capital that the firm could have and still find the IRR
acceptable.
Initial investment $160,000
Year (t) Cash inflows
1 $35,000
2 $25,000
3 $45,000
4 $45,000
5 $45,000
The project's IRR is?
The maximum cost of capital that the firm could have and still
find the IRR acceptable is?

Internal rate of return (IRR)
The internal rate of return (IRR) refers to the compound annual
rate of return that a project generates based on its up-front cost
and subsequent cash flows. Consider this case:
Falcon Freight is evaluating a proposed capital budgeting
project (project Delta) that will require an initial investment of
$1,500,000.
Falcon Freight has been basing capital budgeting decisions on a
project’s NPV; however, its new CFO wants to start using the IRR
method for capital budgeting...

4. Modified internal rate of return (MIRR)
The IRR evaluation method assumes that cash flows from the
project are reinvested at the same rate equal to the IRR. However,
in reality the reinvested cash flows may not necessarily generate a
return equal to the IRR. Thus, the modified IRR approach makes a
more reasonable assumption other than the project’s IRR.
Consider the following situation:
Cold Goose Metal Works Inc. is analyzing a project that requires
an initial investment of $500,000....

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