Question

A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 27,100 1 11,100 2 14,100 3 10,100 If the required return is 15 percent, what is the IRR for this project?

Answer 1

Answer:

15%

Explanation:

The computation of the internal rate of return is shown below:

Given that

Year       Cash Flow

0             -$27,100

1                $11,100

2               $14,100

3                $10,100

The formula to compute IRR is

= IRR()

After applying the above formula, the internal rate of return is 15%