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

Answer 1

Answer: 13%

Explanation:

The Internal Rate of Return is the discount rate that brings the Net Present Value to zero.

One can use Excel to solve for this;

= IRR(-127900, 43800, 40200, 46200, 41800)

= 13%