Question

What is the internal rate of return on an investment that has an initial cost of...

What is the internal rate of return on an investment that has an initial cost of $83,100 and projected cash inflows of $18,700, $38,600, $29,200, and $34,100 for Years 1 to 4, respectively?

A.

10.55 percent
B.

12.08 percent
C.

15.58 percent
D.

13.29 percent
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Homework Answers

Answer #1

Internal rate of return is calculated using a financial calculator by inputting the below:

  • Press the CF button.
  • CF0= -$83,100. It is entered with a negative sign since it is a cash outflow.
  • Cash flow for each year should be entered.
  • Press Enter and down arrow after inputting each cash flow.
  • After entering the last cash flow cash flow, press the IRR and CPT button to get the IRR of the project.

The IRR of the project is 15.58%.

Hence, the answer is option c.

In case of any query, kindly comment on the solution.

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