Question

A firm evaluates all of its projects by applying the IRR rule. A project under consideration...

 A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows:

 Year Cash Flow 0 –\$ 28,100 1 12,100 2 15,100 3 11,100

 If the required return is 15 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

 Solution: IRR 17.45 % YES Projects should be accepted as its IRR is higher than required rate of return 15% of the project Working Notes: We can get exact by excel method like below A B C 1 Year Cash Flow 2 0 -28,100 3 1 12,100 4 2 15,100 5 3 11,100 17.45% Using Excel formula =IRR(C2:C5) =IRR(C2:C5) here in formula C is column in which all cash flows are entered. Number 2 & 5 shows that data from 2th row   to 5th row of column C is used for IRR calculation. Please feel free to ask if anything about above solution in comment section of the question.

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