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TEA [102]
2 years ago
13

Jogging gear is considering a project with an initial cash requirement of $238,400. the project will yield cash flows of $4,930

monthly for 65 months. what is the rate of return on this project?
Business
1 answer:
natta225 [31]2 years ago
7 0
First, we need to calculate for the total return of the project by multiplying 4,930 by 65. Doing so will give us an answer of $320,450. Then, we calculate the rate of return as shown below.
                     rate of return = ($320,450 / $238,400) x 100% 
                                             = 134.42%
Thus, the rate of return of the said project is approximately 134.42%. 
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Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested

IRR can be calculated with a financial calculator  

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Cash flow in year 5 = $20,300

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To find the IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.  

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