A project is estimated to cost $77,766 and provide annual net cash flows of $26,

Question

A project is estimated to cost $77,766 and provide annual net cash flows of $26,000 for five years.

Determine the internal rate of return for this project, using the Present Value of an Annuity of $1 at Compound Interest table shown above.

Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192

Explanation / Answer

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. 6% 10% 12% 15% 20% Present Value of an Annuity of $1 at Compound Interest 5Years 4.212 3.791 3.605 3.353 2.991 Cash Inflow 26000 26000 26000 26000 26000 Present Value of Cash Flow (PVAF*Cash Flow) 109512 98566 93730 87178 77766 IRR will be 20% since at IRR, PV of cash flow should be equal to Outflow. IRR is a rate where NPV is zero.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.