Question

1.

(IRR calculation) Jella Cosmetics is considering a project that costs $725,000 and is expected to last for 9 years and produce future cash flows of $170,000 per year. If the appropriate discount rate for this project is 20 percent, what is the project's IRR? The project's IRR is %. (Round to two decimal places.)

2.

Answer 1

Solution to the QUESTION-1

Internal rate of return (IRR) for the Project

The Present Value factor for determining IRR = Initial Investment Cost / Net Annual Cash Inflow

= $725,000 / $170,000 per year

= 4.264706

From the Present Value Annuity Factor Table (PVAIF Table), the discount rate (IRR) corresponding to the factor of 4.264706 for 9 Years is closest to 18.27%.(Approx)

“Hence, the Internal rate of return (IRR) for the Project will be 18.27%”

PLEASE BE NOTED (More than 1 Question)

Dear student, as per the CHEGG guidelines, the experts are advised to answer the first question only when multiple questions were asked. Here, the multiple questions have asked in the single post and therefore, only the first question have been answered as per the CHEGG guidelines. Can you please ask the remaining questions separately. THANK YOU..!!!