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A research division of a large consumer electronics company has developed a new type of mp3...

A research division of a large consumer electronics company has developed a new type of mp3 player. The project will require an immediate cash outflow of $1,665,321. The new project is expected to produce cash flows of $500,000 per year for 4 consecutive years beginning at the end of year one. What is this projects internal rate of return?

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Answer #1
Internal rate of return is the rate at which present value of cash inflow is equal to present value of cash outflow.
Year Cash flow
0 $       -16,65,321
1 $           5,00,000
2 $           5,00,000
3 $           5,00,000
4 $           5,00,000
IRR = =irr(D4:D8)
= 7.75%
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