Question

Question 2: What is the internal rates of return (IRR) for the project that has an initial outlay of $10,000 and a single cash inflow of $17,182 in 8 years?

Question 3: Assume that a new project will annually generate revenues of $2,000,000 and cash expenses (including both fixed and variable costs) of $800,000, while increasing deprecation by $200,000 per year. In additional, the firm’s tax rate is 34%. Calculate the operating cash flows for the new project

Answer 1

1-	Year	cash flow
	0	-10000
	1	0
	2	0
	3	0
	4	0
	5	0
	6	0
	7	0
	8	17182
Internal rate of return	Using IRR function in MS excel =irr(cell reference year 0 cash flow: cell reference year 8 cash flow)	7.00%
2-	revenue		2000000
	less cash expense		800000
	less depreciation		200000
	operating profit		1000000
	less tax-34%		340000
	after tax profit		660000
	add depreciation		200000
	operating cash flow		860000