Question

ABC Company is considering a project that has the following cash flow data. What is the...

ABC Company is considering a project that has the following cash flow data. What is the project's IRR? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

Year:

0

1

2

3

4

5

Cash flows:

-$1,100

$375

$375

$375

$375

$375

0 0
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Answer #1

Internal rate of return can be calculated using a financial calculator by inputting the below:

  • •   Press the CF button.
  • •   CF0= -1,100. It is entered with a negative sign since it is a cash outflow.
  • •   Cash flow for each of the five years should be entered.
  • •   Press Enter and down arrow after inputting each cash flow.
  • •   After entering the last cash flow cash flow, press the IRR and CPT button to get the IRR of the project.

The IRR of the project is 20.88%.

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