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Tennessee Corporation is analyzing a capital expenditure that will involve a cash outlay of $109,332. Estimated...

Tennessee Corporation is analyzing a capital expenditure that will involve a cash outlay of $109,332. Estimated cash flows are expected to be $36,000 annually for 4 years. The present value factors for an annuity of $1 for 4 years at interest of 10%, 12%, 14%, and 15% are 3.170, 3.037, 2.914, and 2.855, respectively. The internal rate of return for this investment is 12% 3% 9% 10%

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Answer #1
PV of Cash Outlay = PV of Cash Inflow
109332 = 36000*PVIFA (Rate,4)
PVIFA(rate,4) = 109332/36000
PVIFA(rate,4) = 3.037
In above question The present value factors for an annuity of $1 for 4 years at interest of 12% is3.037
So IRR = 12%
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