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P9-10 Calculating IRR [LO5] What is the IRR of the following set of cash flows?   ...

P9-10 Calculating IRR [LO5]

What is the IRR of the following set of cash flows?

  

Year Cash Flow
0 –$11,710            
1 6,600            
2 6,800            
3 3,400            

Multiple Choice

  • 23.32%

  • 22.4%

  • 21.72%

  • 24%

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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= -$11,710. 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 project is 22.86%.

Hence, the answer is option b.

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

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