What is the internal rate of return (IRR) of a project that has the following cash flows?
The required return is 10.0%.
Year Cash Flow
0 $ (12,000)
1 $ 3,000
2 $ 3,000
3 $ 3,000
4 $ 3,000
5 $ 3,000
6 $ 3,000
Group of answer choices
12.98%
None of these are correct.
14.55%
7.69%
10.19%
The correct answer is 12.98%
Note:
Let the IRR be x.
Now , Present Value of Cash Outflows=Present Value of Cash Inflows
12000 = 3000/(1.0x) +3000/ (1.0x)^2 +3000/(1.0x)^3+.........+ $ 3000/(1.0x)^6
Or x= 12.978%
Hence the IRR is 12.98%
What is the internal rate of return (IRR) of a project that has the following cash...
What is the internal rate of return (IRR) of a project that has the following cash flows? The required return is 10.0%. Year Cash Flow 0 $ (12,000) 1 $ 3,000 2 $ 3,000 3 $ 3,000 4 $ 3,000 5 $ 3,000 6 $ 3,000 Group of answer choices None of these are correct. 12.98% 10.19% 14.55% 7.69% PreviousNext
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