You are considering a project with an initial cost of 42000

You are considering a project with an initial cost of $42,000. What is the IRR for this project if the cash inflows are $16,500, $28,400, and $7,500 a year over the next three years respectively? If the required return is 13% based on IRR, should this project be accepted?

Now IRR = 10 + {2105.94 / (2105.94+1246.32) }*5 = 10 + 3.141 = 13.141%

The required rate of return is 13% while the IRR of this project is 13.141% hence the project should be acceptable.

Year	Cash Flow	PVF@10%	PV	PVF@15%	PV
0	-42000	1	-42000	1	-42000
1	16500	0.909	15000	0.870	14347.83
2	28400	0.826	23471.07	0.756	21474.48
3	7500	0.751	5634.861	0.658	4931.37
	NPV		2105.935		-1246.32

You are considering a project with an initial cost of $42,000. What is the IRR for this project if the cash inflows are $16,500, $28,400, and $7,500 a year over

You are considering a project with an initial cost of 42000

Solution

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