Question

Compute the IRR statistic for Project F. The appropriate cost of capital is 12 percent. (Do...

Compute the IRR statistic for Project F. The appropriate cost of capital is 12 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Project F
Time: 0 1 2 3 4
Cash flow: −$10,300 $3,950 $4,780 $2,120 $2,750



Should the project be accepted or rejected?

  • rejected

  • accepted

0 0
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Answer #1

Net present cash outflow = 10300

Net present cash inflow = cash inflow /1+coc x 1+coc (multiply till no. Of years it takes to generate inflow)

Year 1. 3950/(1.12) = 3537

Year 2. 4780/(1.12x1.12). = 3810

Year. 3. 2120/(1.12x1.12x1.12). = 1509

Year 4. 2750/(1.12x1.12x1.12x1.12). = 1747

Total net cash inflow. = 10603

Net present value = net cash inflow - net cash outflow

= 10603. - 10300

=. 300

As net present value is positive the project shall accepted.

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