A project cost $1,000 and will result in cash flows of 82 per year for four...
A project cost $1,000 and will result in cash flows of 82 per year for four years. In addition the project will return $1000 to the investor at the end of the fourth year. The project’s cost of capital is 8 percent. What is the projects internal rate of return? Record your answer as a decimal accurate to 4 decimal places.
Homework Answers
Let irr be x%
At irr,present value of inflows=present value of outflows.
1000=82/1.0x+82/1.0x^2+82/1.0x^3+82/1.0x^4+1000/1.0x^4
Hence x=irr=0.082(Approx).
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