IRR Project L costs $44,726.06, its expected cash inflows are $10,000 per year for 8 years,...

Question

Question

IRR Project L costs $44,726.06, its expected cash inflows are $10,000 per year for 8 years, and its WACC is 10%. What is the

Answer 1

Answer #1

IRR means rate at which present value of cash inflows are equal to project cost

Hence we can find IRR by using following formula


Present Value Of Annuity

c= Cash Flow	$ 10,000.00
i= Interest Rate	i
n= Number Of Periods	8


Present Value Of An Annuity
= C*[1-(1+i)^-n]/i]

Where,
C= Cash Flow per period
i = interest rate per period
n=number of period


$44726.06= $10000[ 1-(1+i)^-8 /i]

4.472606 =[ 1-(1+i)^-8 /i]

i=15.10%

IRR= 15.10%

Answer 2

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