Question

Find internal rate of return of a project with an initial cost of $43,000, expected net...

Find internal rate of return of a project with an initial cost of $43,000, expected net cash inflows of $9,550 per year for 8 years, and a cost of capital of 8.80%.

Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72.

Group of answer choices

17.13%

14.90%

13.70%

18.32%

14.15%

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Homework Answers

Answer #1

IRR is the rate at which PV of Cash Inflows are equal to Initial cost

IRR = Rate at which least +ve NPV + [ NPV at that rate / change in NPV due to 1% inc in disc rate ] * 1%

= 14% + [ 1301.15 / 1447.23 ] * 1%

= 14% + 0.90%

= 14.90%

Option B is correct.

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