Question

Calculating IRR, payback, and a missing cash flow) The Merriweather Printing Company is trying to decide on the merits of constructing a new publishing facility The project is expected to provide a series of positive cash flows for each of the next four years. The estimated cash flows associated with this project are as follows Year Project Cash Flow $770,000 370,000 290,000 520,000 Text If you know that the project has a regular payback of 24 years, what is the project's IRR? la Libre The IRR of the project is (Round to two decimal places.) Calcula Resource

Answer 1

Answer to Question 1.

Payback Period = 2.4 years

The payback period is the period in which the amount of investment is received back.
Therefore,
Initial Investment = $770,000 + $370,000 + ($290,000 * 0.40)
Initial Investment = $1,256,000

μυυατα Agrimer DEF B8 for IRR(B3:17) А. C 1 Calculation of Internal Rate of return (IRR): Year Cash Flow 0 -1,256,000 770,000 370,000 290,000 520,000 IRR 22.88%

Answer to Question 2.

Alignment D E F G Clipboard Font B18 f =IRR(B14:B17) A C 12 Calculation of Internal Rate of return (IRR): Year Cash Flow 0 -11,000 1,600 5,100 7,500 IRR 11.28% 13