How to solve this problem (finding IRR by excel also by formula to compare results) Please step by step so I can follow? Thanks
Miner's Mexican Grill Inc. plans to open its 100th restaurant by the end of next year. The new restaurant will require an initial investment of $300,000 and an annual operating cost of $31,000. It will have a $62,000 salvage value after 6 years. The company also estimates that the new restaurant will bring in revenue of $43,400 each year. Calculate the IRR of the investment if the company's minimum attractive rate of return is 12% per year.
| Calculation of the IRR of the investment | |||||||||
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | IRR | |
| Initial Investment in project | -$300,000.00 | ||||||||
| Operating Costs | -$31,000.00 | -$31,000.00 | -$31,000.00 | -$31,000.00 | -$31,000.00 | -$31,000.00 | |||
| Salvage value | $62,000.00 | ||||||||
| Revenue | $43,400.00 | $43,400.00 | $43,400.00 | $43,400.00 | $43,400.00 | $43,400.00 | |||
| Net Cash flows | -$300,000.00 | $12,400.00 | $12,400.00 | $12,400.00 | $12,400.00 | $12,400.00 | $74,400.00 | -14.95% | |
| IRR of the Investment = | -14.95% | ||||||||
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