Wing Air, Inc. has a project with the following cash flows: Required Return of 10%. Annual...

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Wing Air, Inc. has a project with the following cash flows: Required Return of 10%. Annual...

Wing Air, Inc. has a project with the following cash flows: Required Return of 10%. Annual cash flows: Year 0 $(23,000) Year 1 $9,500 Year 2 $10,300 Year 3 $6,500 What is the internal Rate of Return (IRR)?

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Answer 1

Answer #1

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

23000=9500/1.0x+10300/1.0x^2+6500/1.0x^3

Hence x=irr=7.46%(Approx).

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Answer 2

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