Iron Works International is considering a project that will produce annual cash flows of $38,700, $47,400, $58,100, and $23,600
over the next four years, respectively. What is the internal rate of return if the project has an initial cost of $112,300?
2 answers:
Answer:
internal rate of return (IRR) for Iron Works International is 19%
Explanation:
Internal rate of return (IRR) is the minimum discount rate that management uses to spot what capital investments or future projects will yield a suitable return and be worth pursuing.
The IRR for a selected project is that the rate that equates net present value of future cash flows from the project to zero.
In other words, if we compute this value of future cash flows from a possible project using the internal rate with the discount rate and subtract out the initial investment, our net present value of the project would be zero.
For Iron Works International, the internal rate of return of the project with an initial cost of $112,300 is explained mathematically in the attached sheets.
You might be interested in
The down payment that would be paid by reg is $2,800.
<h3 /><h3>What is a down payment?</h3>A down payment is the first partial payment for the purchase of price expensive items or services, such as a car or a house. It is usually paid off in cash or equal at the time of finalizing the transaction. A loan of some kind is then asked to finance the remainder of the payment.
<u>Computation </u><u>of a down Payment:</u>
<u />
According to the question,
The total amount of car would be:
r= 10.27%,
,
t=
Monthly Payment = $773.89.
Let X be the amount of payment that is given in the starting.
The amount of down payment would be:
Hence, Option D is correct.
Learn more about the down payment, refer:
<u />