What is the internal rate of return (IRR) of a project that has the following cash...

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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

business finance

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Answer 1

Answer #1

Let irr be x%
At irr,present value of inflows=present value of outflows.

12,000=3000/1.0x+3000/1.0x^2+..............+3000/1.0x^6

Hence x=irr=12.98%(Approx).

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Answer 2

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