A project that provides annual cash flows of $2,550 for nine years costs $10,500

Question

A project that provides annual cash flows of $2,550 for nine years costs $10,500 today. A project that provides annual cash flows of $2,550 for nine years costs $10,500 today. At a required return of 11 percent, the NPV of the project is NPV $3619.47 At a required return of 27 percent, the NPV of the project is NVP $ -2154.42 Requirement : At what discount rate would you be indifferent between accepting the project and rejecting it? Discount rate % ? please show all the steps you made. I would like to use it as practice. (If you could show me formulas and how to do it on calculator) Thanks!!!!!

Explanation / Answer

We will find the IRR for this. 10500= 2,550/r+(2,550/r^2)+(2,550/r^3)+(2,550/r^4)+(2,550/r^5)+(2,550/r^6)+(2,550/r^7)+(2,550/r^8)+(2,550/r^9) IRR= 19.34%

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