.11 1 2%-21:16 ezto.mheducation.com/hn 17 connect. FINA2201 2017: Sec 9 YASH ODH

Question

.11 1 2%-21:16 ezto.mheducation.com/hn 17 connect. FINA2201 2017: Sec 9 YASH ODHRANI HW 7 instructionsI help Question 8@r13} Save & Exit Sutmt Time remaining: 21341 769 points A firm evaluates all of ts projects by applying the IRR rule. A project under consideration has the follawing cash flows Year Cach Flow 0 27,800 11,800 14,800 10,800 If the roquired return is 18 percent, what is the IRR for this project? (Do not round intermediate oalculationa. Enter your answer as a percent rounded to 2 decimal places, e.g, 32.16.) Should the firm accept the projec No References eBook & Resources Worksheet Learning Objective: 09-05 The internal rate of retum criterion and its strengths and weaknesses Section 9.5 The Internal Rate of Return Difficulty: Basic

Explanation / Answer

Let irr be x%
At irr,present value of inflows=present value of outflows.

Hence

27800=11800/1.0x+14800/1.0x^2+10800/1.0x^3

Hence x=IRR=16.64%(Approx)

Hence since IRR is less than the required return;the project should not be accepted.

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

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