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Ymorist [56]
3 years ago
13

Diamond enterprises is considering a project that will produce cash inflows of $41,650 a year for three years followed by $49,00

0 in year 4. what is the internal rate of return if the initial cost of the project is $142,000?
Business
1 answer:
ASHA 777 [7]3 years ago
5 0
8.42%

Using your financial calculator, input the initial cost of $142,000 as a cash outflow (negative), and each of the four cash inflows (positive) as $41,650 for each of the first 3 years and $49,000 in the fourth year. Then hit the IRR button on your financial calculator to compute the internal rate of return (IRR), as 8.4167, rounded to 8.42%. 
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See below.

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