Question

What is the IRR of the following set of cash flows? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Year Cash Flow
0 –$ 15,800
1 6,500
2 7,800
3 6,300
IRR %

Answer 1

Answer: 14.59%

Explanation:

The Internal Rate of Return(IRR) is the discount rate that brings the Net Present Value to zero. It is used to decide the viability of projects. The project is generally considered viable if the Cost of capital is less than the IRR.

You can use Excel to calculate the IRR;

= IRR(-15,800,6,500,7,800,6,300)

From the picture attached you can see that the IRR is 14.59%