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Svetach [21]
3 years ago
9

Lennon, Inc. is considering a five-year project that has an initial outlay or cost of $80,000. The respective future cash inflow

s from its project for years 1, 2, 3, 4 and 5 are: $15,000, $25,000, $35,000, $45,000, and $55,000. Lennon uses the internal rate of return method to evaluate projects. What is Lennon's IRR
Business
1 answer:
SIZIF [17.4K]3 years ago
4 0

Answer:

26.16%

Explanation:

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 determined using a financial calculator

CO = -80,000

C1 = $15,000

C2 = $25,000

C3 = $35,000,

C4 = $45,000

C 5 = 55,000

IRR = 26.16

To determine 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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