A project has the following cash flow data. What is its IRR? Year 0 1 2...

Question

Question

A project has the following cash flow data. What is its IRR?

Year	0	1	2	3	4	5
Cash flows	−$9,500	$2,000	$2,025	$2,050	$2,075	$2,100

Answer 1

Answer #1


Project
IRR is the rate at which NPV =0
IRR	0.025660291
Year	0	1	2	3	4	5
Cash flow stream	-9500	2000	2025	2050	2075	2100
Discounting factor	1	1.02566	1.051979	1.078973	1.1066599	1.135057
Discounted cash flows project	-9500	1949.963	1924.943	1899.955	1875.0115	1850.127
NPV = Sum of discounted cash flows
NPV Project =	1.2733E-07
Where
Discounting factor =	(1 + IRR)^(Corresponding period in years)
Discounted Cashflow=	Cash flow stream/discounting factor

IRR=	2.57%

Answer 2

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