Question

very important

Question 2 (4pts). For the cash flows shown below, decide whether the project is acceptable or not using IRR function in MS Excel (Assume MARR -10%). Provide the screenshot Year First cost (S) Revenue (S) M&O cost (5) Salvage (5) 0 1,000,000 300,000 100.000 200,000 400,000 100,000 300,000 500.000 200.000 200.000 Refer to the Screenshot Guideline in the next page Note: 1. Attach this page (this introduction page) as the cover page. 2. Copy and paste the screenshot of the answer on a Word file. 3. Keep the scanned copy in your smart phone for your proof just in case. No excuse on this matter. 4. Submission after due time won't be accepted (0 mark). 5. Any cheating or copying found will receive 0 point. (No tolerance). Screenshot Guideline: 1. The screenshot should provide: • Name -(A) in the screenshot example below • Cash flow - (B) in the screenshot example below • Formula-(C) in the screenshot example below • Rate of Return-(D) in the screenshot example below • Decision-(E) in the screenshot example below 2. Any missing information listed above results in losing some points (Not showing your name in the screenshot will lose 2pts/question automatically) 3. If the same screenshots are found among your answers, both students will receive 0 point for this asignment. f RRDD) Formula A Namen Chee R . Accept 22 Rate of return found (E)Final decision Screenshot example

Answer 1

Hi,  The internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake a project.

Here attached is an image of how IRR is calculated in Excel. The formula taken is =IRR(C4:C9). Net Cash flows for the year = - Initial Cost + Revenue - M&O Cost + Salvage Value. Since IRR is 13% and MARR is 10%, project will be accepted.