Compute the IRR static for Project E. The appropriate cost of capital is 9 percent. (Do...

Question

Question

Answer 1

Answer #1

Let the IRR be x.

Now , Present Value of Cash Outflows=Present Value of Cash Inflows

1500 =550/(1.0x) +630/ (1.0x)^2 +620/(1.0x)^3+ 400 /(1.0x)^4+200/(1.0x)^5

Or x= 20.949%

Hence the IRR is 20.95%

--------

Answer: Accepted.

Note: Since the IRR is greater than the cost of capital, the project must be accepted.

Answer 2

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