Question

An investment cost $12,000 with expected cash flows of $4,000 for 7 years. The discount rate is 15.2382%. The IRR is ___ for the project, thus we should ____ the project.

Select one:

A. 12.59%, accept

B. 12.59%, reject

C. 27.12%, accept

Answer 1

The IRR is 27.12% for this project, thus we should accept this project.

The answer is option C

Computation of IRR as follows:

C11 А 1 Discount rate 2 3 Initial investment 4. Cash Flow 5 Cash Flow 6 Cash Flow 7 Cash Flow 8 Cash Flow 9 Cash Flow 10 Cash Flow 11 IRR 12. • EIRR(C3:010) в 15% Year Cash Flow 0$ (12,000) 1 $ 4,000 2 $ 4,000 3 $ 4,000 4 H 4,000 5 $ 4,000 6 $ 4,000 7 $ 4,000 27.118762%