Question

The Steel Factory is considering a project that will produce annual cash flows of $43,800, $40,200, $46,200, and $41,800 over the next four years, respectively. What is the internal rate of return if the initial cost of the project is $127,900? Multiple Choice 12.83 percent 10.19 percent 11.28 percent 13.00 percent 12.24 percen

Answer 1

Answer:

13.00 percent

Explanation:

IRR is the rate at which the NPV equal to zero. Using the CF key on a financial calculator, use the following inputs to solve for Internal Rate of Return (IRR) ;

Initial investment; CF0 = -127,900

Yr 1 cashflow; C01 = 43,800

Yr 2 cashflow; C02 = 40,200

Yr 3 cashflow; C03 = 46,200

Yr 4 cashflow; C04 = 41,800

then compute the IRR by keying in IRR, CPT = 13.00%