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12. Project L requires an initial outlay at t = 0 of $48,910, its expected cash...

12. Project L requires an initial outlay at t = 0 of $48,910, its expected cash inflows are $9,000 per year for 10 years, and its WACC is 12%. What is the project's IRR? Round your answer to two decimal places.

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Answer #1

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

48,910=9000/1.0x+9000/1.0x^2+.....................+9000/1.0x^10

Hence x=irr=12.96%(Approx).

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